CMRF 8-K
Cim Group, Inc. (CMRF)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
(Address of Principal Executive Offices)
(Zip Code)
(
(Registrant’s telephone number, including area code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading |
Name of each exchange on which registered | ||
| None | None | None |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Introductory Note
This Current Report on Form 8-K (“Current Report”) is being filed in connection with the closing of a series of transactions (collectively, the “Transactions”) undertaken by the Registrant on June 24, 2026 to acquire the real assets management business and portfolio of investments of CIM Group, LLC (“Legacy CIM”) and to establish the Registrant as a diversified owner, operator, lender, developer and real assets management platform.
As further detailed in this Current Report on Form 8-K, the Transactions consisted of:
| • | The formation by the Registrant of a new operating partnership, CIM Finance Holdings, LP (“New OP”), in which CIM Finance Holdings GP, LLC, a wholly-owned subsidiary of the Registrant (“New OP General Partner”), is the sole general partner. |
| • | The contribution by the Registrant of all of the Registrant’s equity interests in CIM Real Estate Finance Operating Partnership, LP (“Existing OP”) to New OP in exchange for limited partnership units in New OP (“New OP Class B LP Units”). |
| • | The contribution and assignment by the Registrant of all of the Registrant’s other material assets and liabilities to Existing OP, including the Second Amended and Restated Management Agreement, dated March 24, 2023 (the “Original Management Agreement”), by and between the Registrant and CIM Real Estate Finance Management, LLC, a Delaware limited liability company (the “Manager”). |
| • | The contribution by CIM Group Holdings, LLC, a direct and indirect subsidiary of Legacy CIM (“CIM Group Holdings”), of all of the issued and outstanding equity interests of CIM Group Management, LLC and CIM Group Investments, LLC (the “Contributed Entities”), which comprise Legacy CIM’s real assets management business and portfolio, together with $1,000 of cash consideration, to New OP in exchange for newly issued Class A limited partnership units in New OP possessing the same economic rights as the New OP Class B LP Units and certain consent rights (as described elsewhere in this Current Report) (the “New OP Class A LP Units”) and shares of a newly created series of special voting preferred stock, $0.01 par value per share, of the Registrant (“Special Voting Preferred Shares”). |
In connection with the Transactions, the Registrant, which was previously named “CIM Real Estate Finance Trust, Inc.”, was renamed “CIM Group, Inc.” As of immediately following the closing, CIM Group Holdings held 907,376,073.663 New OP Class A LP Units and 907,376,073.663 Special Voting Preferred Shares, representing approximately 67.5% economic and voting ownership of the combined company. The remaining 32.5% was owned by the Registrant’s pre-transaction stockholders through (i) their continued ownership of the issued and outstanding shares of common stock, $0.01 par value per share, of the Registrant (“Common Shares”) and (ii) the Registrant’s retaining 436,884,776.208 New OP Class B LP Units representing approximately 32.5% economic ownership of New OP.
Item 1.01 Entry into a Material Definitive Agreement.
Contribution Agreement of Existing OP to New OP
On June 24, 2026, the Registrant and New OP entered into the Contribution Agreement (the “Preliminary Contribution Agreement”) pursuant to which the Registrant contributed all of the issued and outstanding equity interests in Existing OP and CRI REIT IV, LLC, a Delaware limited liability company and then-limited partner of Existing OP, to New OP.
Contribution and Subscription Agreement
On June 24, 2026, the Registrant, New OP and CIM Group Holdings entered into the Contribution and Subscription Agreement (the “Contribution Agreement”) pursuant to which CIM Group Holdings contributed all of the issued and outstanding equity interests of the Contributed Entities to New OP in exchange for 907,376,073.663 newly issued New OP Class A LP Units and 907,376,073.663 Special Voting Preferred Shares representing approximately 67.5% economic and voting ownership of the combined company.
Earnout Provisions
The Contribution Agreement provides that the Registrant and New OP will effect a potential earnout issuance to CIM Group Holdings of New OP Class A LP Units and Special Voting Preferred Shares that could increase CIM Group Holdings’ economic and voting ownership of the combined company by up to approximately 3.75%, based on the achievement of certain financial performance metrics from January 1, 2026 through December 31, 2028 (the “Earnout Period”). If New OP Class A LP Units are issued to CIM Group Holdings as part of an earnout payment, New OP will be required to make a special cash distribution to CIM Group Holdings in an amount equal to the aggregate distributions CIM Group Holdings would have been entitled to receive in respect of such New OP Class A LP Units had CIM Group Holdings held such New OP Class A LP Units through the period commencing on the date immediately following the expiration of the Earnout Period and ending on the actual payment date of the earnout amount.
Listing and Liquidity Alternatives
The Registrant has agreed to use commercially reasonable efforts to pursue a listing of its Common Shares on a national securities exchange (a “Listing”), including initiating the listing process within 24 months following the closing and consummating such Listing within five years following the closing. Prior to the consummation of a Listing, the Registrant is required to use commercially reasonable efforts to seek additional third-party capital investment from one or more bona fide third-party investors willing to permit at least fifty percent (50%) of the net cash proceeds of such investment to be reserved and applied solely for the purpose of redeeming or repurchasing Common Shares held by stockholders unaffiliated with CIM Group Holdings or the Registrant. If a Listing has not been consummated by the fifth anniversary of the closing, the Registrant has agreed to evaluate and pursue in good faith a recapitalization transaction intended to provide liquidity to its stockholders and to use commercially reasonable efforts to consummate such transaction. If CIM Group Holdings determines that a recapitalization is not reasonably likely to be completed within one year following the fifth anniversary of the closing, CIM Group Holdings may require the Registrant to pursue alternative strategic transactions, including a sale of the Registrant, business combination or other liquidity event, subject to the terms and conditions set forth in the Contribution Agreement.
Dividends and Distributions
For a three-year period following the closing, New OP will be required to make distributions sufficient to allow the Registrant to declare and pay quarterly dividends to stockholders of the Registrant of at least $0.06 per Common Share for the first four quarters following the closing, $0.07 per Common Share for the next four quarters, and $0.095 per Common Share for the next four quarters. The obligations of the Registrant and New OP to make the dividends and distributions described above are each subject to applicable law. Furthermore, New OP’s obligation to make distributions to the Registrant may be waived, in whole or in part, at any time by the affirmative vote or written consent of a majority of the independent members of the board of directors of the Registrant (the “Board”).
Specified Investment Opportunities
The Contribution Agreement provides that, before certain specified investment opportunities may be pursued by the three founders of Legacy CIM - Richard Ressler, Avraham Shemesh and Shaul Kuba (the “CIM Principals”) - CIM Group Holdings is required to provide notice of the opportunity to the Registrant. Following receipt of such notice, the Registrant, acting through the Board, will have ten business days to determine whether it wishes to pursue the opportunity. If the Registrant declines the opportunity or does not respond within the specified period, the opportunity will be deemed waived by the Registrant and the CIM Principals may pursue the opportunity without any further obligation to the Registrant.
Post-Closing Governance
The Contribution Agreement provides that CIM Group Holdings will vote all of its Special Voting Preferred Shares such that the terms of service of (i) T. Patrick Duncan, W. Brian Kretzmer and Howard A. Silver, subject to their nomination and recommendation by the Board, and (ii) any additional independent director candidates necessary to ensure that a majority of the Board is comprised of independent directors will expire no sooner than the one-year anniversary of the consummation of a Listing, recapitalization or strategic transaction, whichever occurs first. The Contribution Agreement contemplates that, as soon as reasonably practicable following the closing, the Registrant will take, and will cause the Board to take, all steps reasonably necessary to cause any director affiliated with CIM Group Holdings (other than Richard Ressler) to resign from the Board and to elect to the Board Avraham Shemesh, Shaul Kuba and an additional individual designated by CIM Group Holdings who satisfies applicable independence standards.
Equity Awards
The Contribution Agreement includes an acknowledgement by the parties that the Transactions do not constitute a “Change of Control” as defined under the Registrant’s equity plans, and that accordingly, all unvested existing equity awards will continue to operate and vest in accordance with their existing terms. The Contribution Agreement contemplates that, following the closing, the Registrant will issue equity awards under the CIM Real Estate Finance Trust, Inc. 2024 Manager Equity Incentive Plan (the “2024 Manager Plan”) with respect to the 2025 performance year in an aggregate amount of 2,195,923 shares (the “2025 Awards”) to the Manager and/or the Registrant’s eligible named executive officers, on terms and conditions consistent with the 2024 Manager Plan and as determined by the Board. Pursuant to the foregoing, 2,165,489.342 restricted stock units (“RSUs”) were awarded to the Manager, and 30,433.658 RSUs were awarded to David Thompson, the newly appointed Chief Financial Officer, Principal Accounting Officer and Treasurer of the Registrant. The Contribution Agreement also contemplates that, following the closing, one or more of the Contributed Entities, or one of its subsidiaries, designated by CIM Group Holdings will offer to repurchase vested and unrestricted Common Shares from eligible holders.
Other Terms
The Contribution Agreement also contains representations and warranties by the parties, indemnification provisions, and other customary terms and conditions. The representations, warranties and covenants of each party set forth in the Contribution Agreement have been made only for the purposes of, and were and are solely for the benefit of the parties to, the Contribution Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Contribution Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Accordingly, the representations and warranties may not describe the actual state of affairs at the date they were made or at any other time, and investors should not rely on them as statements of fact. In addition, such representations and warranties were made only as of the date of the Contribution Agreement or such other date as is specified in the Contribution Agreement. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Contribution Agreement, which subsequent information may or may not be fully reflected in the Registrant’s public disclosures. Accordingly, the Contribution Agreement is included with this filing only to provide investors with information regarding the terms of the Contribution Agreement, and not to provide investors with any factual information regarding the parties thereto, their respective affiliates or their respective businesses.
Second Amended and Restated Agreement of Limited Partnership of New OP
On June 24, 2026, the Registrant, New OP General Partner, and CIM Group Holdings entered into the Second Amended and Restated Agreement of Limited Partnership of New OP (the “New OP Limited Partnership Agreement”).
New OP General Partner has general authority to manage the business and affairs of New OP, including authority with respect to acquisitions and dispositions, financings, investments, borrowings, litigation matters and other operational decisions. Notwithstanding the foregoing, the New OP Limited Partnership Agreement contemplates that Registrant, New OP, and their respective subsidiaries may not take specified actions without the prior written consent
of holders of more than 50% of the then issued and outstanding New OP Class A LP Units or, in the case of actions to be taken by the Registrant or any subsidiaries of the Registrant (for the avoidance of doubt, excluding New OP and its subsidiaries), the holders of more than 50% of the then issued and outstanding Special Voting Preferred Shares until such time as (i) CIM Group Holdings and its permitted transferees collectively hold less than 10% of the partnership units of New OP that are issued and outstanding as of closing (as appropriately adjusted hereafter to give effect to any unit split, reverse split, combination, reclassification, recapitalization or similar transaction) and (ii) the consummation of a Listing.
At the closing, the New OP Limited Partnership Agreement provides that the limited partnership units of New OP consist entirely of (i) New OP Class A LP Units, which may only be issued to limited partners (other than the Registrant) and only on a one-to-one basis with the number of votes that the Special Voting Preferred Shares issued by the Registrant entitle the holders thereof to cast with respect to any matter as to which such holders are entitled to cast votes under the Registrant’s charter and applicable law, and (ii) New OP Class B LP Units, which may only be issued to the Registrant and only on a one-to-one basis with each Common Share issued by the Registrant such that, as of any given time, the number of issued and outstanding New OP Class B LP Units are the same as the number of issued and outstanding Common Shares.
The New OP Limited Partnership Agreement contemplates that any and all distributions by New OP of cash, stock or any other property to the partners of New OP will be made to the partners in proportion to their respective percentage ownership of New OP limited partnership units, subject to an entitlement to customary tax distributions intended to enable partners to satisfy tax liabilities arising from allocations of taxable income.
Until the consummation of a Listing, the holders of New OP Class A LP Units have no right to have their New OP Class A LP Units redeemed or exchanged for Common Shares. Following the consummation of a Listing, the New OP Limited Partnership Agreement provides holders of New OP Class A LP Units the right to require New OP to redeem, subject to specified conditions and restrictions, such holders’ New OP Class A LP Units in exchange for a like number of Common Shares (any Common Shares issued or issuable in such an exchange, “Exchanged Common Shares”) or, at the election of the Registrant, a cash amount representing the value of such Common Shares. In connection with any such exchange, the Registrant is required to concurrently redeem any Special Voting Preferred Shares issued in correspondence to such redeemed New OP Class A Units.
The New OP Limited Partnership Agreement also contains other customary provisions, including restrictions on transfers, preemptive rights and other provisions governing the issuance of additional partnership interests and additional funding arrangements.
Tax Receivable Agreement
On June 24, 2026, the Registrant, New OP and CIM Group Holdings entered into a Tax Receivable Agreement (the “Tax Receivable Agreement”).
The Tax Receivable Agreement generally provides for the payment by the Registrant to CIM Group Holdings and other beneficiaries of 85% of certain tax benefits, if any, actually realized by the Registrant as a result of increases in tax basis and other tax attributes arising from exchanges or redemptions of New OP Class A LP Units and certain other transactions.
The amount and timing of payments under the Tax Receivable Agreement will vary depending on a number of factors, including the timing of exchanges, the amount of tax basis increases, the taxable income generated by the Registrant and the applicable tax rates.
The Tax Receivable Agreement also provides for acceleration of payment obligations in certain circumstances, including certain changes of control and material breaches of the agreement. In such circumstances, the Registrant may be required to make a lump-sum payment based on the present value of expected future tax benefits determined under the agreement.
Registration Rights Agreement
On June 24, 2026, the Registrant and CIM Group Holdings entered into a Registration Rights Agreement (the “Registration Rights Agreement”) providing holders of Exchanged Common Shares customary shelf registration, demand registration and piggyback registration rights following the consummation of a Listing whereby the Registrant will register resales of Exchanged Common Shares to the extent that such shares are not able to then be sold without restriction under Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”).
The foregoing descriptions of the Preliminary Contribution Agreement, Contribution Agreement, New OP Limited Partnership Agreement, Tax Receivable Agreement and the Registration Rights Agreement do not purport to be complete and are subject to, and qualified in each case in their entirety by, the full text of such agreements, copies of which are attached hereto as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5 and are incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
The information set forth in the Introductory Note and Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 2.01 by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in the Introductory Note and Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 3.02 by reference. The New OP Class A LP Units, New OP Class B LP Units and Special Voting Preferred Shares were each issued pursuant to exemptions from registration under the Securities Act by reason of Section 4(a)(2) thereof.
Item 3.03 Material Modification to Rights of Security Holders.
The information set forth in the Introductory Note and Items 1.01 and 5.03 of this Current Report on Form 8-K is incorporated into this Item 3.03 by reference.
Item 5.01 Changes in Control of Registrant.
The information set forth in the Introductory Note and Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 5.01 by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Departure of Officers
On June 24, 2026, Nathan D. DeBacker ceased to serve as Chief Financial Officer, Principal Accounting Officer and Treasurer of the Registrant, effective June 24, 2026.
Appointment of Officers
On June 24, 2026, the Board appointed David Thompson to serve as Chief Financial Officer, Principal Accounting Officer and Treasurer of the Registrant, effective June 24, 2026.
Mr. Thompson, age 62, has been Chief Executive Officer of Creative Media & Community Trust Corporation (NASDAQ: CMCT) since March 2019. Mr. Thompson served as the Chief Financial Officer of CMCT from March 2014 to March 2019. Mr. Thompson is also a Principal, Chief Financial Officer of CIM Group, L.P., a subsidiary of CIM Group Management, LLC, and serves on CIM Group, L.P.’s Investment and Valuation Committees. He also served on the CIM Group, L.P. Investment Committee Credit Sub-Committee. In addition, Mr. Thompson has served as the Chief Executive Officer and Trustee of CIM Real Assets & Credit Fund, a closed-ended interval fund that seeks to invest in a mix of institutional-quality real estate and credit assets, since February 2019. In February 2024,
Mr. Thompson was elected as a Trustee of CIM Commercial Lending REIT, a subsidiary of the Registrant. Prior to joining CIM Group, L.P. in 2009, Mr. Thompson spent 15 years with Hilton Hotels Corporation, most recently as Senior Vice President and Controller, where he was responsible for worldwide financial reporting, financial planning and analysis, internal control and technical accounting compliance. Mr. Thompson’s experience includes billions of dollars of real estate acquisitions and dispositions in the office, retail, multifamily, hotel, gaming and timeshare sectors, as well as significant capital markets experience. Mr. Thompson began his career as a CPA in the Los Angeles office of Arthur Andersen & Co. Mr. Thompson received a B.S. degree in Accounting from the University of Southern California.
As described in “Contribution and Subscription Agreement - Equity Awards” in Item 1.01 of this Current Report on Form 8-K, pursuant to the 2024 Manager Plan, 30,433.658 RSUs were awarded to Mr. Thompson. There are no other arrangements or understandings between Mr. Thompson and any other person pursuant to which Mr. Thompson was selected as an officer.
Mr. Thompson is a principal of Legacy CIM and as such he participates in the earnings and profits of Legacy CIM and also participates in carried interest earned by Legacy CIM. Mr. Thompson does not have any other direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On June 23, 2026, the Registrant filed Articles of Amendment (the “Authorized Shares Articles of Amendment”) with the State Department of Assessments and Taxation of Maryland (“SDAT”) to increase the number of authorized but unissued shares of capital stock of the Registrant to 3,100,000,000, consisting of 2,000,000,000 Common Shares and 1,100,000,000 shares of preferred stock, $0.01 par value per share (“Preferred Stock”).
On June 23, 2026, the Registrant also filed Articles Supplementary with SDAT classifying 1,000,000,000 authorized but unissued shares of Preferred Stock as Special Voting Preferred Shares. Pursuant to the Articles Supplementary, any Special Voting Preferred Shares issued by the Registrant will entitle the holders thereof to a number of votes equal to the number of New OP Class A LP Units issued concurrently with such Special Voting Preferred Shares on all matters submitted to a vote of the Registrant’s stockholders, subject to the terms of the Articles Supplementary. The Special Voting Preferred Shares do not confer on their holders any economic rights or entitlements.
In addition, on June 26, 2026, the Registrant filed Articles of Amendment with SDAT providing for the change of the Registrant’s name from “CIM Real Estate Finance Trust, Inc.” to “CIM Group, Inc.” (the “Name Change Articles of Amendment”).
The Registrant also amended and restated its bylaws (the “Third Amended and Restated Bylaws”), effective on June 24, 2026, to provide that, until the earlier of the first anniversary of a Listing or the consummation of a liquidity transaction, any related-party transaction required to be disclosed under Item 404 of Regulation S-K must be approved by both (i) a majority of the disinterested directors and either (ii) a majority of the independent directors or a committee comprised solely of at least two independent directors.
The foregoing descriptions of the Authorized Shares Articles of Amendment, Articles Supplementary, Name Change Articles of Amendment and Third Amended and Restated Bylaws do not purport to be complete and are subject to, and qualified in each case in their entirety by, the full text of such documents, copies of which are attached hereto as Exhibits 3.1, 3.2, 3.3 and 3.4 and are incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On June 29, 2026, Legacy CIM and the Registrant issued a joint press release to announce the Transactions. A copy of the press release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. Additionally, on June 29, 2026, Legacy CIM and the Registrant issued a joint investor presentation, a copy of which is attached hereto as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in this Item 7.01, including Exhibits 99.1 and 99.2, is being “furnished” to the U.S. Securities and Exchange Commission (the “SEC”) and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any filing made by the Registrant under the Securities Act or the Exchange Act, except as shall be expressly set forth by a specific reference in such filing.
Item 8.01 Other Events.
Common Share Information
The Board intends to continue to approve and establish an estimated value of the Common Shares, based on the Registrant’s then-current operations, and to publish such valuation on at least an annual basis. Until the next valuation is approved and established by the Board, the per share value used for purposes of reinvesting Common Shares pursuant to the Registrant’s distribution reinvestment plan and redeeming shares pursuant to the Registrant’s share redemption program will continue to be $5.14, as previously approved and established by the Board as of December 31, 2025.
Termination of REIT Status
The Board has determined that, as a result of the Transactions, the Registrant will no longer meet the requirements to qualify as a real estate investment trust (“REIT”) under the applicable provisions of the Internal Revenue Code of 1986, as amended, and that, accordingly, it is no longer in the best interests of the Registrant for it to attempt to, or continue to, qualify as a REIT. The termination of the Registrant’s REIT election will be effective January 1, 2026. In connection therewith, the Registrant has filed a certificate of notice with SDAT notifying stockholders of the Board’s determination that it is no longer in the best interests of the Registrant to continue to be qualified as a REIT and that therefore the applicable restrictions on ownership and transfer of shares of stock of the Registrant as set forth in the Registrant’s charter shall no longer apply.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
The financial statements required by Item 9.01(a) to be filed with this Current Report on Form 8-K will be filed by amendment to this Form 8-K no later than 71 days after the date this initial Current Report on Form 8-K is required to be filed.
(b) Pro Forma Financial Information.
The pro forma financial statements required by Item 9.01(b) to be filed with this Current Report on Form 8-K will be filed by amendment to this Form 8-K no later than 71 days after the date this initial Current Report on Form 8-K is required to be filed.
(d) Exhibits
| * | In accordance with Item 601(a)(5) of Regulation S-K, certain schedules and exhibits have not been filed. The Registrant hereby agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request. |
Cautionary Note Regarding Forward-Looking Information
Certain statements contained in this Current Report on Form 8-K, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements include, but are not limited to: (i) the anticipated benefits of the proposed transaction to the Registrant and the Registrant’s stockholders, (ii) the anticipated impact of the proposed transaction on the combined company’s business, future financial and operating results, liquidity profile and access to capital, (iii) other aspects of both companies’ operations and operating results, and (iv) our goals, plans and projections with respect to our operations, financial position and business strategy. We caution that forward-looking statements are not guarantees. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Factors that could cause or contribute to such material differences include: (i) the failure of the transaction to deliver the estimated value and benefits expected by the Registrant, including the failure of the combined company to generate sufficient cash to finance contemplated dividend amounts to stockholders and to successfully pursue a listing of the Registrant’s common stock on a national stock exchange, (ii) the incurrence of unexpected future costs, liabilities or obligations as a result of the transaction, (iii) the effect of the announcement of the transaction on the ability of the combined company to retain and hire necessary personnel and maintain relationships with clients and other material business counterparties, (iv) the failure of the Registrant to successfully transform into a diversified asset manager and to implement its plans, forecasts and other expectations with respect to CIM Group, LLC’s real assets management business and investment portfolio over time, (v) the failure of the combined company to declare and pay expected dividend amounts over the next three years and (vi) other risks and uncertainties inherent in a transaction of this size and nature. The payment of dividends in the future, if any, will be at the discretion of the Registrant’s board of directors and will depend upon such factors as earnings levels, capital requirements, contractual restrictions, our overall financial condition, available distributable reserves and any other factors deemed relevant by the Registrant’s board of directors.
In addition to the statements referred to above, you can identify these forward-looking statements by the use of words such as “may,” “will,” “seek,” “expects,” “anticipates,” “believes,” “targets,” “intends,” “should,” “estimates,” “could,” “continue,” “assume,” “projects,” “plans” or similar expressions. Such forward-looking statements are subject to various risks and uncertainties, including those described above and those under the section entitled “Risk Factors” in the Registrant’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, filed with the SEC. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Current Report on Form 8-K and in the Registrant’s other filings with the SEC. The Registrant undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CIM GROUP, INC. | ||||||
| Date: June 29, 2026 | By: | /s/ David Thompson | ||||
| David Thompson | ||||||
| Chief Financial Officer, Principal Accounting Officer and Treasurer | ||||||
Exhibit 3.1
CIM REAL ESTATE FINANCE TRUST, INC.
ARTICLES OF AMENDMENT
CIM Real Estate Finance Trust, Inc., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Section 5.1 of Article V of the charter of the Corporation (the “Charter”) is hereby deleted in its entirety and replaced with the following:
A. The Corporation has authority to issue 3,100,000,000 shares of Capital Stock, consisting of 2,000,000,000 shares of Common Stock, $.01 par value per share (“Common Shares”), and 1,100,000,000 shares of Preferred Stock, $.01 par value per share (“Preferred Shares”). The aggregate par value of all authorized shares of Capital Stock having par value is $31,000,000. If shares of one class of Capital Stock are classified or reclassified into shares of another class pursuant to this Article V, the number of authorized shares of the former class shall be automatically decreased and the number of shares of the latter class shall be automatically increased, in each case by the number of shares so classified or reclassified, so that the aggregate number of shares of Capital Stock of all classes that the Corporation has authority to issue shall not be more than the total number of shares of Capital Stock set forth in the first sentence of this paragraph. The Board of Directors, with the approval of a majority of the entire Board and without any action by the Stockholders, may amend the Charter from time to time to increase or decrease the aggregate number of shares of Capital Stock or the number of shares of Capital Stock of any class or series that the Corporation has authority to issue.
SECOND: The total number of shares of stock which the Corporation had authority to issue immediately prior to the foregoing amendment of the Charter was 490,000,000 shares of Common Stock, $.01 par value per share, and 10,000,000 shares of Preferred Stock, $.01 par value per share. The aggregate par value of all shares of stock having par value was $5,000,000.
THIRD: The total number of shares of stock which the Corporation has authority to issue pursuant to the foregoing amendment of the Charter is 3,100,000,000 shares of stock, consisting of 2,000,000,000 shares of Common Stock, $.01 par value per share, and 1,100,000,000 shares of Preferred Stock, $.01 par value per share. The aggregate par value of all shares of stock having par value is $31,000,000.
FOURTH: The foregoing amendment to the Charter has been approved by a majority of the entire Board of Directors of the Corporation pursuant to Article V, Section 5.1 of the Charter and is limited to a change expressly authorized by Section 2-105(a)(13) of the Maryland General Corporation Law (the “MGCL”) without any action by the stockholders of the Corporation.
FIFTH: The information required by Section 2-607(b)(2)(i) of the MGCL is not changed by the foregoing amendment of the Charter.
SIXTH: The undersigned officer acknowledges these Articles of Amendment to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned acknowledges that, to the best of such officer’s knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to be executed in its name and on its behalf by its Chief Financial Officer, Principal Accounting Officer and Treasurer and attested to by its Secretary on this 23rd day of June, 2026.
| ATTEST: | CIM REAL ESTATE FINANCE TRUST, INC. | |||||||
| /s/ Laura Eichelsderfer |
By: | /s/ Nathan DeBacker (SEAL) | ||||||
| Name: Laura Eichelsderfer | Name: | Nathan DeBacker | ||||||
| Title: Secretary | Title: | Chief Financial Officer, Principal Accounting Officer and Treasurer | ||||||
Exhibit 3.2
CIM REAL ESTATE FINANCE TRUST, INC.
ARTICLES SUPPLEMENTARY
SPECIAL VOTING PREFERRED STOCK
CIM Real Estate Finance Trust, Inc., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Under a power contained in Article V of the charter of the Corporation (the “Charter”), the Board of Directors of the Corporation (the “Board”), by resolutions duly adopted, classified 1,000,000,000 authorized but unissued shares of Preferred Stock, $0.01 par value per share, of the Corporation as shares of a series of preferred stock, designated as Special Voting Preferred Stock (the “Special Voting Preferred Stock”) with the following preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption which, upon any restatement of the Charter, shall become part of Article V of the Charter, with any necessary or appropriate renumbering or relettering of the sections or subsections hereof. Capitalized terms used but not defined herein shall have the meanings set forth in the Charter.
Special Voting Preferred Stock
Section 1. Number of Shares and Designation.
A series of Preferred Shares designated as the “Special Voting Preferred Stock” is hereby established, and the number of shares constituting such series shall be 1,000,000,000.
Section 2. Definitions.
“Affiliate” shall have the meaning set forth in Article I of the Partnership Agreement.
“Board of Directors” shall have the meaning set forth in Article IV of the Charter.
“Bylaws” shall have the meaning set forth in Article IV of the Charter.
“Capital Stock” shall have the meaning set forth in Article IV of the Charter.
“Cash Amount” shall have the meaning set forth in Article I of the Partnership Agreement.
“Charter” shall mean the charter of the Corporation.
“CIM Limited Partner” shall have the meaning set forth in Article I of the Partnership Agreement.
“Class A Limited Partnership Units” shall have the meaning set forth in Article I of the Partnership Agreement.
“Class B Limited Partnership Units” shall have the meaning set forth in Article I of the Partnership Agreement.
“CMFT Common Shares Amount” shall have the meaning set forth in Article I of the Partnership Agreement.
“Common Shares” shall mean the Corporation’s Common Stock, $0.01 par value per share.
“Corporation” shall have the meaning set forth in Article I of the Charter.
“Corresponding Partnership Unit” shall mean, with respect to each share of Special Voting Preferred Stock, the Class A Limited Partnership Unit issued by the Operating Partnership concurrently with the issuance by the Corporation of such share of Special Voting Preferred Stock, and after taking into account following such issuance any and all automatic adjustments to such Class A Limited Partnership Unit, from time to time in accordance with Section 7.9 or 7.10 of the Partnership Agreement. “Corresponding Partnership Units” shall have the correlative meaning.
“Corresponding Partnership Unit Number” shall mean, with respect to each share of Special Voting Preferred Stock, a number equal to the number of Class A Limited Partnership Units issued by the Operating Partnership concurrently with the issuance by the Corporation of such share of Special Voting Preferred Stock, as such number shall be adjusted, from time to time, in accordance with Section 7.9 or 7.10 of the Partnership Agreement. The Corresponding Partnership Unit Number as of the Original Issuance Date shall be one (1).
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“General Partner” shall have the meaning set forth in Article I of the Partnership Agreement.
“General Partnership Interest” shall have the meaning set forth in Article I of the Partnership Agreement.
“Limited Partner” shall have the meaning set forth in Article I of the Partnership Agreement.
“Limited Partnership Interest” shall have the meaning set forth in Article I of the Partnership Agreement.
“Operating Partnership” shall mean CIM Finance Holdings, LP, a Delaware limited partnership.
“Original Issuance Date” shall mean the date of original issuance of the Special Voting Preferred Stock.
“Partnership Agreement” shall mean the Amended and Restated Agreement of Limited Partnership of the Operating Partnership, as amended from time to time.
“Partnership Unit” shall have the meaning set forth in Article I of the Partnership Agreement.
“Permitted Merger” shall have the meaning set forth in Section 9.4(b) of Article IX of the Partnership Agreement.
“Permitted Transferee” shall have the meaning set forth in Section 10.2(b) of Article X of the Partnership Agreement.
“Person” shall have the meaning set forth in Article IV of the Charter.
“Preferred Shares” shall have the meaning set forth in Section 5.1 of Article V of the Charter.
“Qualifying Person” shall mean a Limited Partner other than a General Partner that is issued Class A Limited Partnership Units as contemplated by Section 4.2(b) of the Partnership Agreement.
“Restricted Entities” shall mean, collectively, the Corporation and its Subsidiaries. For the avoidance of doubt, the Restricted Entities do not include the Operating Partnership or its Subsidiaries.
“Special Voting Preferred Stock” shall mean the series of Preferred Shares designated as Special Voting Preferred Stock.
“Stockholders” shall have the meaning set forth in Article IV of the Charter.
“Subsidiary” shall mean, with respect to any Person, any corporation or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person.
Section 3. Dividends and other Distributions.
The holders of shares of Special Voting Preferred Stock shall not be entitled to any regular or special dividend payments, as such. Without limiting the foregoing, the holders of shares of Special Voting Preferred Stock shall not be entitled to any dividends or other distributions declared or paid with respect to the Common Shares or any other Capital Stock.
Section 4. Liquidation, Dissolution or Winding Up.
The holders of shares of Special Voting Preferred Stock shall not be entitled to any distribution rights or any other rights to receive any property upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, as such.
Section 5. Pairing.
The Corporation shall not issue or agree to issue any share or shares of Special Voting Preferred Stock to any Person unless effective provision has been made for the concurrent issuance by the Operating Partnership to the same Person of a number of Class A Limited Partnership Units equal to the number of votes that such share or shares of Special Voting Preferred Stock entitle such Person to cast with respect to any matter as to which the holders of Special Voting Preferred Stock are entitled to cast votes under the Charter and applicable law and for the pairing of such share or shares of Special Voting Preferred Stock and Class A Limited Partnership Units in accordance with Section 4.2 of the Partnership Agreement. For the avoidance of doubt, the shares of Special Voting Preferred Stock issued pursuant to the Contribution Agreement (as defined in the Partnership Agreement) meet these requirements. Until the limitation on transfer provided for under Section 4.2(b) of the Partnership Agreement shall be terminated in accordance with the terms of the Partnership Agreement:
(a) No share of Special Voting Preferred Stock shall be transferable, and no such share shall be transferred on the stock transfer books of the Corporation, except together with a transfer of the Corresponding Partnership Unit in accordance with the provisions of the Partnership Agreement.
(b) A legend shall be placed on the face of any certificate representing ownership of shares of Special Voting Preferred Stock referring to the restriction on transfer set forth herein and in the Partnership Agreement.
Section 6. Voting Rights.
(a) Holders of the Special Voting Preferred Stock shall not have any voting rights except as set forth in this Section 6.
(b) Each share of Special Voting Preferred Stock shall entitle the holder thereof to a number of votes equal to the Corresponding Partnership Unit Number on all matters submitted to a vote of the Stockholders. The holders of shares of Special Voting Preferred Stock shall vote together with the holders of Common Shares as one class on all matters submitted to a vote of the holders of Common Shares and, except as expressly set forth in Section 6(c) or Section 9 below, the holders of shares of Special Voting Preferred Stock shall have no other voting rights, as a separate class or otherwise, including any rights to vote as a class with respect to any extraordinary corporate action such as a merger, consolidation, dissolution, liquidation or the like.
(c) Until such time as the CIM Limited Partner and its Permitted Transferees collectively hold less than ten percent of the Partnership Units that are issued and outstanding as of the Original Issuance Date (as appropriately adjusted hereafter to give effect to any unit split, reverse split, combination, reclassification, recapitalization or similar transaction) and the Common Shares are listed on a national securities exchange registered under Section 6 of the Exchange Act and so long as any shares of Special Voting Preferred Stock remain
outstanding, the Corporation (or, in the case of any action taken by the Board of Directors, the Board of Directors) shall not, and shall cause the Corporation’s Subsidiaries not to, directly or indirectly, without the prior affirmative vote or consent of the holders of at least a majority of the shares of Special Voting Preferred Stock outstanding at the time, given in person or by proxy, either in writing, by electronic transmission or at a meeting (the holders of shares of Special Voting Preferred Stock voting separately as a class):
(i) enter into any indebtedness financing arrangement in a single transaction or in a series of related transactions in an amount that is, in the aggregate together with all prior debt issuances following the Original Issuance Date, in excess of ten percent of the Corporation’s existing long-term consolidated indebtedness (other than entry into a debt financing arrangement between or among the Corporation and any of its wholly owned Subsidiaries);
(ii) issue or cause any Restricted Entity to issue any shares of Capital Stock or other equity securities, provided that the Corporation may issue, in a single transaction or in a series of related transactions, equity securities that would in the aggregate be less than or equal to 5% of the then total issued and outstanding Common Shares calculated on a fully diluted, as converted, exchanged or exercised basis, but only if such equity securities have designations, preferences, rights, priorities or powers that are in all respects pari passu or less favorable than those provided to holders of Common Shares;
(iii) adopt any stockholder rights plan or similar agreement;
(iv) amend the charter, articles of incorporation, bylaws, operating agreement or other applicable corporate organizational, constituent and/or governing documents of any Restricted Entity;
(v) exchange or dispose of all or substantially all of the assets of any Restricted Entity in a single transaction or series of related transactions;
(vi) enter into a merger, sale or other combination to which any Restricted Entity is a party (except for any Permitted Merger pursuant to Section 9.4(b) of the Partnership Agreement);
(vii) transfer, mortgage, pledge, hypothecate or grant a security interest in all or substantially all of the assets of any Restricted Entity;
(viii) appoint or remove (without cause) the Chief Executive Officer of the Corporation (or the Person holding an equivalent officer position);
(ix) terminate the employment of any officers of a Restricted Entity or terminate the association of a partner with any of the Corporation’s Subsidiaries, in each case, without cause;
(x) liquidate or dissolve any Restricted Entity;
(xi) withdraw, remove or substitute any person who serves as a general partner (including, for the avoidance of doubt, the Corporation) with respect to any Restricted Entity;
(xii) transfer or cause to be transferred any beneficial ownership, in whole or in part, of any general partner interest with respect to the Operating Partnership or any Restricted Entity (including, for the avoidance of doubt, the General Partnership Interest and Limited Partnership Interests held directly or indirectly by the Corporation) to any Person other than the CIM Limited Partner or its Permitted Transferees;
(xiii) enter into any new business outside of the Operating Partnership or any of its Subsidiaries or otherwise engage in, directly or indirectly, including through any Affiliate, any business or activities that are the same as, substantially similar to or competitive with the business of the Operating Partnership or any of its Subsidiaries, or otherwise divert or reroute any business or opportunity from the Operating Partnership or any of its Subsidiaries; or
(xiv) amend or terminate (without cause) any existing management or advisory agreements (as of the Original Issuance Date) to which the CIM Limited Partner or any of its Affiliates is a party.
Section 7. Reacquired Shares.
Any shares of Special Voting Preferred Stock redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be cancelled automatically, shall cease to be outstanding and shall become authorized but unissued shares of Special Voting Preferred Stock, and the former holder or holders thereof shall have no further rights (hereunder or otherwise) with respect to such shares. Any shares of Special Voting Preferred Stock that are cancelled in accordance with the preceding sentence may be reissued or reclassified by the Corporation in accordance with the applicable provisions of the Charter and the Partnership Agreement.
Section 8. Cancellation and Redemption.
(a) In the event that the Operating Partnership is party to any consolidation, merger, combination or other transaction pursuant to which the Class A Limited Partnership Units are converted or changed into or exchanged for stock and/or other securities of any other entity that is not an Affiliate of the Corporation or the Operating Partnership and/or cash or any other property, then in any such case the shares of Special Voting Preferred Stock shall be cancelled and extinguished on a pro rata basis with the Corresponding Partnership Units converted or changed, or exchanged, at and as of the effective time of such transaction without any consideration therefor (except for the consideration, if any, provided for in the agreement with respect to such transaction), and thereafter the former holders of such shares of Special Voting Preferred Stock shall have no further rights (hereunder or otherwise) with respect to such cancelled and extinguished shares.
(b) The shares of Special Voting Preferred Stock shall not be redeemable by the Corporation. Notwithstanding the foregoing, if at any time any Qualifying Person elects, pursuant to Section 9.4 of the Partnership Agreement, to have any Class A Limited Partnership Unit redeemed or to cause the consummation of a Permitted Merger with the Corporation or a Subsidiary thereof in which any Class A Limited Partnership Unit is cancelled, then upon the payment of the applicable Cash Amount or CMFT Common Shares Amount upon such redemption or Permitted Merger in accordance with the terms and conditions of the Partnership Agreement, the shares of Special Voting Preferred Stock paired with the Class A Limited Partnership Units so redeemed or cancelled shall become authorized but unissued shares of Special Voting Preferred Stock as contemplated by Section 7 above, and thereafter the former holders thereof shall have no further rights (hereunder or otherwise) with respect to such shares.
Section 9. Amendments and Mergers.
The Charter shall not be amended in any manner (including without limitation by merger, consolidation or otherwise) that would alter or change any of the powers, preferences or special rights of the Special Voting Preferred Stock, as set forth herein, so as to affect them adversely, or to otherwise defeat or diminish the purpose or effect of or relative voting rights resulting from the issuance of the Special Voting Preferred Stock, without the affirmative vote of the holders of at least a majority of the outstanding shares of Special Voting Preferred Stock, voting separately as a class.
Section 10. Fractional Shares.
Special Voting Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights and to have the benefit of all other rights of holders of shares of Special Voting Preferred Stock.
Section 11. Not Subject to Article VI.
As a result of the determination by the Board of Directors on June 23, 2026 that it is no longer in the best interests of the Corporation to attempt to, or continue to, qualify as a REIT, which date constitutes a Restriction Termination Date and has occurred on or prior to the Original Issuance Date, the Special Voting Preferred Stock shall not be subject either upon the Original Issuance Date or at any future time to the limitations on Beneficial Ownership, Constructive Ownership and Transfers of shares of Capital Stock set forth in Article VI of the Charter.
SECOND: The Special Voting Preferred Stock has been classified or reclassified, and designated, by the Board of Directors under the authority contained in the Charter. These Articles Supplementary have been approved by the Board of Directors in the manner and by the vote required by law.
THIRD: The undersigned acknowledges the foregoing Articles Supplementary to be the duly authorized corporate act of the Corporation and, as to all matters or facts required to be verified under oath, hereby acknowledges to the best of his knowledge, information and belief that these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
[Remainder of page intentionally left blank. Signature page follows.]
IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed under seal in its name and on its behalf by its Chief Financial Officer, Principal Accounting Officer and Treasurer and attested to by its Secretary on this 23rd day of June, 2026.
| ATTEST: | CIM REAL ESTATE FINANCE TRUST, INC. | |||||||
| By: | /s/ Laura Eichelsderfer | By: | /s/ Nathan DeBacker | |||||
| Name: Laura Eichelsderfer | Name: Nathan DeBacker | |||||||
| Title: Secretary | Title: Chief Financial Officer, Principal Accounting Officer and Treasurer | |||||||
Exhibit 3.3
CIM REAL ESTATE FINANCE TRUST, INC.
ARTICLES OF AMENDMENT
CIM Real Estate Finance Trust Inc., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation (the “Charter”) is hereby amended by deleting existing Article I in its entirety and substituting in lieu thereof a new article to read as follows:
ARTICLE I
NAME
The name of the corporation (which is hereinafter called the “Corporation”) is:
CIM Group, Inc.
SECOND: The amendment to the charter of the Corporation as set forth above has been duly approved by at least a majority of the entire Board of Directors as required by law. The amendment set forth herein is made without action by the stockholders of the Corporation, pursuant to Section 2-605(a)(1) of the Maryland General Corporation Law.
THIRD: The undersigned acknowledges these Articles of Amendment to be the corporate act of the Corporation and as to all matters or facts required to be verified under oath, the undersigned acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
-signature page follows-
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to be signed in its name and on its behalf by its Chief Financial Officer, Principal Accounting Officer and Treasurer and attested to by its Assistant Secretary on this 24th day of June, 2026.
| ATTEST: | CIM REAL ESTATE FINANCE TRUST, INC. | |||||||||
| /s/ Laura Eichelsderfer |
By: | /s/ David Thompson | (SEAL) | |||||||
| Name: Laura Eichelsderfer | Name: | David Thompson | ||||||||
| Title: Assistant Secretary | Title: | Chief Financial Officer, Principal Accounting Officer and Treasurer |
||||||||
Exhibit 3.4
CIM REAL ESTATE FINANCE TRUST, INC.
THIRD AMENDED AND RESTATED BYLAWS
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of the Corporation in the State of Maryland shall be located at such place as the Board of Directors may designate.
Section 2. ADDITIONAL OFFICES. The Corporation may have additional offices, including a principal executive office, at such places as the Board of Directors may from time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE. All meetings of stockholders shall be held at the principal executive office of the Corporation or at such other place as shall be set in accordance with these Bylaws and stated in the notice of the meeting.
Section 2. ANNUAL MEETING. An annual meeting of stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on the date and at the time and place set by the Board of Directors. The Board of Directors is authorized to determine that a meeting not be held at any place, but instead may be held partially or solely by means of remote communication. In accordance with these Bylaws and subject to any guidelines and procedures adopted by the Board of Directors, stockholders and proxy holders may participate in any meeting of stockholders held by means of remote communication and may vote at such meeting as permitted by Maryland law. Participation in a meeting by these means constitutes presence in person at the meeting.
Section 3. SPECIAL MEETINGS.
(a) General. The president, the chief executive officer, the chairman of the board, and the Board of Directors may call a special meeting of the stockholders. Except as provided in subsection (b)(4) of this Section 3, a special meeting of stockholders shall be held on the date and at the time and place set by the chairman of the board, chief executive officer, president or Board of Directors, whoever has called the meeting. Subject to subsection (b) of this Section 3, a special meeting of stockholders shall also be called by the secretary of the Corporation to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast on such matter at such meeting.
(b) Stockholder-Requested Special Meetings.
(1) Any stockholder of record seeking to have stockholders request a special meeting shall, by sending written notice to the secretary (the “Record Date Request Notice”) by registered mail, return receipt requested, request the Board of Directors to fix a record date to determine the stockholders entitled to request a special meeting (the “Request Record Date”). The Record Date Request Notice shall set forth the purpose of the meeting and the matters proposed to be acted on at it, shall be signed by one or more stockholders of record as of the date of signature (or their agents duly authorized in a writing accompanying the Record Date Request Notice), shall bear the date of signature of each such stockholder (or such agent) and shall set forth all information relating to each such stockholder and each matter proposed to be acted on at the meeting that would be required to be disclosed in connection with the solicitation of proxies for the election of directors in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such a solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”). Upon receiving the Record Date Request Notice, the Board of Directors may fix a Request Record Date. The Request Record Date shall not precede and shall not be more than ten days after the close of business on the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors. If the Board of Directors, within ten days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date, the Request Record Date shall be the close of business on the tenth day after the first date on which a Record Date Request Notice is received by the secretary.
(2) In order for any stockholder to request a special meeting to act on any matter that may properly be considered at a meeting of stockholders, one or more written requests for a special meeting (collectively, the “Special Meeting Request”) signed by stockholders of record (or their agents duly authorized in a writing accompanying the request) as of the Request Record Date entitled to cast not less than a majority of all of the votes entitled to be cast on such matter at such meeting (the “Special Meeting Percentage”) shall be delivered to the secretary. In addition, the Special Meeting Request shall (a) set forth the purpose of the meeting and the matters proposed to be acted on at it (which shall be limited to those lawful matters set forth in the Record Date Request Notice received by the secretary), (b) bear the date of signature of each such stockholder (or such agent) signing the Special Meeting Request, (c) set forth (i) the name and address, as they appear in the Corporation’s books, of each stockholder signing such request (or on whose behalf the Special Meeting Request is signed), (ii) the class, series and number of all shares of stock of the Corporation which are owned (beneficially or of record) by each such stockholder and (iii) the nominee holder for, and number of, shares of stock of the Corporation owned beneficially but not of record by such stockholder, (d) be sent to the secretary by registered mail, return receipt requested, and (e) be received by the secretary within 60 days after the Request Record Date. Any requesting stockholder (or agent duly authorized in a writing accompanying the revocation of the Special Meeting Request) may revoke his, her or its request for a special meeting at any time by written revocation delivered to the secretary.
(3) The secretary shall inform the requesting stockholders of the reasonably estimated cost of preparing and mailing or delivering the notice of the meeting (including the Corporation’s proxy materials). The secretary shall not be required to call a special meeting upon stockholder request and such meeting shall not be held unless, in addition to the documents required by paragraph (2) of this Section 3(b), the secretary receives payment of such reasonably estimated cost prior to the preparation and mailing or delivery of such notice of the meeting.
(4) In the case of any special meeting called by the secretary upon the request of stockholders (a “Stockholder-Requested Meeting”), such meeting shall be held at such place, date and time as may be designated by the Board of Directors; provided, however, that the date of any Stockholder-Requested Meeting shall be not more than 90 days after the record date for such meeting (the “Meeting Record Date”); and provided further that if the Board of Directors fails to designate, within ten days after the date that a valid Special Meeting Request is actually received by the secretary (the “Delivery Date”), a date and time for a Stockholder-Requested Meeting, then such meeting shall be held at 2:00 p.m., local time, on the 90th day after the Meeting Record Date or, if such 90th day is not a Business Day (as defined below), on the first preceding Business Day; and provided further that in the event that the Board of Directors fails to designate a place for a Stockholder-Requested Meeting within ten days after the Delivery Date, then such meeting shall be held at the principal executive office of the Corporation. In fixing a date for a Stockholder-Requested Meeting, the Board of Directors may consider such factors as it deems relevant, including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for the meeting and any plan of the Board of Directors to call an annual meeting or a special meeting. In the case of any Stockholder-Requested Meeting, if the Board of Directors fails to fix a Meeting Record Date that is a date within 30 days after the Delivery Date, then the close of business on the 30th day after the Delivery Date shall be the Meeting Record Date. The Board of Directors may revoke the notice for any Stockholder-Requested Meeting in the event that the requesting stockholders fail to comply with the provisions of paragraph (3) of this Section 3(b).
(5) If written revocations of the Special Meeting Request have been delivered to the secretary and the result is that stockholders of record (or their agents duly authorized in writing), as of the Request Record Date, entitled to cast less than the Special Meeting Percentage have delivered, and not revoked, requests for a special meeting on the matter to the secretary: (i) if the notice of meeting has not already been delivered, the secretary shall refrain from delivering the notice of the meeting and send to all requesting stockholders who have not revoked such requests written notice of any revocation of a request for a special meeting on the matter, or (ii) if the notice of meeting has been delivered and if the secretary first sends to all requesting stockholders who have not revoked requests for a special meeting on the matter written notice of any revocation of a request for the special meeting and written notice of the Corporation’s intention to revoke the notice of the meeting or for the chairman of the meeting to adjourn the meeting without action on the matter, (A) the secretary may revoke the notice of the meeting at any time before ten days before the commencement of the meeting or (B) the chairman of the meeting may call the meeting to order and adjourn the meeting from time to time without acting on the matter. Any request for a special meeting received after a revocation by the secretary of a notice of a meeting shall be considered a request for a new special meeting.
(6) The chairman of the board, chief executive officer, president or Board of Directors may appoint regionally or nationally recognized independent inspectors of elections to act as the agent of the Corporation for the purpose of promptly performing a ministerial review of the validity of any purported Special Meeting Request received by the secretary. For the purpose of permitting the inspectors to perform such review, no such purported Special Meeting Request shall be deemed to have been received by the secretary until the earlier of (i) five Business Days after actual receipt by the secretary of such purported request and (ii) such date as the independent inspectors certify to the Corporation that the valid requests received by the secretary represent, as of the Request Record Date, stockholders of record entitled to cast not less than the Special Meeting Percentage. Nothing contained in this paragraph (6) shall in any way be construed to suggest or imply that the Corporation or any stockholder shall not be entitled to contest the validity of any request, whether during or after such five Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).
(7) For purposes of these Bylaws, “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.
Section 4. NOTICE. Not less than ten nor more than 90 days before each meeting of stockholders, the secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting notice in writing or by electronic transmission stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, by mail, by presenting it to such stockholder personally, by leaving it at the stockholder’s residence or usual place of business, by electronic transmission or by any other means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder’s address as it appears on the records of the Corporation, with postage thereon prepaid. If transmitted electronically, such notice shall be deemed to be given when transmitted to the stockholder by an electronic transmission to any address or number of the stockholder at which the stockholder receives electronic transmissions. The Corporation may give a single notice to all stockholders who share an address, which single notice shall be effective as to any stockholder at such address, unless such stockholder objects to receiving such single notice or revokes a prior consent to receiving such single notice. Failure to give notice of any meeting to one or more stockholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this Article II or the validity of any proceedings at any such meeting.
Subject to Section 11(a) of this Article II, any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice. The Corporation may postpone or cancel a meeting of stockholders by making a public announcement (as defined in Section 11(c)(4) of this Article II) of such postponement or cancellation prior to the meeting. Notice of the date, time and place to which the meeting is postponed shall be given not less than ten days prior to such date and otherwise in the manner set forth in this Section 4.
Section 5. ORGANIZATION AND CONDUCT. Every meeting of stockholders shall be conducted by an individual appointed by the Board of Directors to be chairman of the meeting or, in the absence of such appointment or appointed individual, by the chairman of the board or, in the case of a vacancy in the office or absence of the chairman of the board, by one of the following officers present at the meeting in the following order: the vice chairman of the board, if there is one, the chief executive officer, the president, the vice presidents in their order of rank and, within each rank, in their order of seniority, the secretary, or, in the absence of such officers, a chairman chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy. The secretary or, in the case of a vacancy in the office or absence of the secretary, an assistant secretary or an individual appointed by the Board of Directors or the chairman of the meeting shall act as secretary. In the event that the secretary presides at a meeting of the stockholders, an assistant secretary, or, in the absence of all assistant secretaries, an individual appointed by the Board of Directors or the chairman of the meeting, shall record the minutes of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the chairman of the meeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of the chairman and without any action by the stockholders, are appropriate for the proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance or participation at the meeting to stockholders of record of the Corporation, their duly authorized proxies and such other individuals as the chairman of the meeting may determine; (c) limiting the time allotted to questions or comments; (d) determining when and for how long the polls should be opened and when the polls should be closed and when announcement of the results should be made; (e) maintaining order and security at the meeting; (f) removing any stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; (g) concluding a meeting or recessing or adjourning the meeting, whether or not a quorum is present, to a later date and time and at a place either (i) announced at the meeting or (ii) provided at a future time through means announced at the meeting; and (h) complying with any state and local laws and regulations concerning safety and security. Unless otherwise determined by the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with any rules of parliamentary procedure.
Section 6. QUORUM. At any meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast at least a majority of all the votes entitled to be cast at such meeting on any matter shall constitute a quorum; but this section shall not affect any requirement under any statute or the charter of the Corporation (the “Charter”) for the vote necessary for the approval of any matter. If such quorum is not established at any meeting of the stockholders, the chairman of the meeting may adjourn the meeting sine die or from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally convened. The date, time and place of the meeting, as reconvened, shall be either (a) announced at the meeting or (b) provided at a future time through means announced at the meeting.
The stockholders present either in person or by proxy, at a meeting which has been duly called and at which a quorum has been established, may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough stockholders to leave fewer than would be required to establish a quorum.
Section 7. VOTING. A plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to elect a director. Each share entitles the holder thereof to vote for as many individuals as there are directors to be elected and for whose election the holder is entitled to vote. A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute or by the Charter. Unless otherwise provided by statute or by the Charter, each outstanding share of stock, regardless of class, entitles the holder thereof to cast one vote on each matter submitted to a vote at a meeting of stockholders. Voting on any question or in any election may be viva voce unless the chairman of the meeting shall order that voting be by ballot or otherwise.
Section 8. PROXIES. A holder of record of shares of stock of the Corporation may cast votes in person or by proxy that is (a) executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted by applicable law, (b) compliant with Maryland law and these Bylaws and (c) filed in accordance with the procedures established by the Corporation. Such proxy or evidence of authorization of such proxy shall be filed with the secretary of the Corporation before or at the meeting. No proxy shall be valid more than eleven months after its date unless otherwise provided in the proxy.
Any stockholder directly or indirectly soliciting proxies from other stockholders must use a proxy card color other than white, which shall be reserved for the exclusive use by the Board of Directors.
Section 9. VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the Corporation registered in the name of a corporation, partnership, trust, joint venture, limited liability company or other entity, if entitled to be voted, may be voted by the president or a vice president, general partner, trustee, managing member or member thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any trustee or fiduciary, in such capacity, may vote stock registered in such trustee’s or fiduciary’s name, either in person or by proxy.
Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time.
The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date, the time after the record date within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or appropriate. On receipt by the secretary of the Corporation of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the holder of record of the specified stock in place of the stockholder who makes the certification.
Section 10. INSPECTORS. The Board of Directors or the chairman of the meeting may appoint, before or at the meeting, one or more inspectors for the meeting and any successor to the inspector. Except as otherwise provided by the chairman of the meeting, the inspectors, if any, shall (a) determine the number of shares of stock represented at the meeting, in person or by proxy, and the validity and effect of proxies, (b) receive and tabulate all votes, ballots or consents, (c) report such tabulation to the chairman of the meeting, (d) hear and determine all challenges and questions arising in connection with the right to vote, and (e) do such acts as are proper to fairly conduct the election or vote. Each such report shall be in writing and signed by the inspector or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.
Section 11. ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER STOCKHOLDER PROPOSALS.
(a) Annual Meetings of Stockholders.
(1) Nominations of individuals for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record at the record date set by the Board of Directors for the purpose of determining stockholders entitled to vote at the annual meeting, at the time of giving of notice by the stockholder as provided for in this Section 11(a) and at the time of the annual meeting (and any postponement or adjournment thereof), who is entitled to vote at the meeting in the election of each individual so nominated or on any such other business and who has complied with this Section 11(a).
(2) For any nomination or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 11, the stockholder must have given timely notice thereof in writing to the secretary of the Corporation and any such other business must otherwise be a proper matter for action by the stockholders. To be timely, a stockholder’s notice shall set forth all information and
certifications required under this Section 11 and shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 150th day nor later than 5:00 p.m., Mountain Time, on the 120th day prior to the first anniversary of the date of the proxy statement (as defined in Section 11(c)(4) of this Article II) for the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, in order for notice by the stockholder to be timely, such notice must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Mountain Time, on the later of the 120th day prior to the date of such annual meeting, as originally convened, or the tenth day following the day on which public announcement of the date of such meeting is first made. The public announcement of a postponement or adjournment of an annual meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.
(3) Such stockholder’s notice shall set forth:
(i) as to each individual whom the stockholder proposes to nominate for election or reelection as a director (each, a “Proposed Nominee”), all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act;
(ii) as to any other business that the stockholder proposes to bring before the meeting, (A) a description of such business (including the text of any proposal), the stockholder’s reasons for proposing such business at the meeting and any material interest in such business of such stockholder or any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom and (B) any other information relating to such business that would be required to be disclosed in a proxy statement or other filing to be made in connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Regulation 14A (or any successor provision) under the Exchange Act;
(iii) as to the stockholder giving the notice, any Proposed Nominee and any Stockholder Associated Person,
(A) the class, series and number of all shares of stock or other securities of the Corporation (collectively, the “Company Securities”), if any, which are owned (beneficially or of record) by such stockholder, Proposed Nominee or Stockholder Associated Person, the date on which each such Company Security was acquired and the investment intent of such acquisition, and any short interest (including any opportunity to profit or share in any benefit from any decrease in the price of such stock or other security) in any Company Securities of any such person,
(B) the nominee holder for, and number of, any Company Securities owned beneficially but not of record by such stockholder, Proposed Nominee or Stockholder Associated Person, and
(C) whether and the extent to which such stockholder, Proposed Nominee or Stockholder Associated Person, directly or indirectly (through brokers, nominees or otherwise), is subject to or during the last six months has engaged in any hedging, derivative or other transaction or series of transactions or entered into any other agreement, arrangement or understanding (including any short interest, any borrowing or lending of securities or any proxy or voting agreement), the effect or intent of which is to (I) manage risk or benefit of changes in the price of Company Securities for such stockholder, Proposed Nominee or Stockholder Associated Person or (II) increase or decrease the voting power of such stockholder, Proposed Nominee or Stockholder Associated Person in the Corporation or any affiliate thereof disproportionately to such person’s economic interest in the Company Securities;
(iv) as to the stockholder giving the notice, any Stockholder Associated Person with an interest or ownership referred to in clauses (ii) or (iii) of this paragraph (3) of this Section 11(a) and any Proposed Nominee,
(A) the name and address of such stockholder, as they appear on the Corporation’s stock ledger, and the current name and business address, if different, of each such Stockholder Associated Person and any Proposed Nominee and
(B) the investment strategy or objective, if any, of such stockholder and each such Stockholder Associated Person who is not an individual and a copy of the prospectus, offering memorandum or similar document, if any, provided to investors or potential investors in such stockholder and each such Stockholder Associated Person;
(v) the name and address of any person who contacted or was contacted by the stockholder giving the notice or any Stockholder Associated Person about the Proposed Nominee or other business proposal;
(vi) to the extent known by the stockholder giving the notice, the name and address of any other person supporting the nominee for election or reelection as a director or the proposal of other business;
(vii) if the stockholder is proposing one or more Proposed Nominees, the information required to be included in a notice to the Corporation required by paragraph (b) of Rule 14a-19 promulgated under the Exchange Act, including a representation that such stockholder intends to solicit the holders of shares of stock of the Corporation representing at least 67% of the voting power of shares of stock entitled to vote on the election of directors in support of director nominees other than the Corporation’s nominees; and
(viii) all other information regarding the stockholder giving the notice and each Stockholder Associated Person that would be required to be disclosed by the stockholder in connection with the solicitation of proxies for the election of directors in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such a solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act.
(4) Such stockholder’s notice shall, with respect to any Proposed Nominee, be accompanied by (i) a certificate executed by the Proposed Nominee (A) certifying that such Proposed Nominee (I) is not, and will not become, a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation in connection with service or action as a director that has not been disclosed to the Corporation; (II) has read and, if elected as a director of the Corporation, agrees to adhere to the Corporation’s Corporate Governance Guidelines and any other policies and guidelines of the Corporation applicable to directors generally (and, upon request by any Proposed Nominee, the secretary of the Corporation shall provide to such Proposed Nominee all such policies and guidelines then in effect); (III) if elected as a director of the Corporation, intends to serve as a director of the Corporation for the entire term until the next annual meeting of stockholders at which such candidate would face re-election; (IV) will notify the Corporation simultaneously with any notification to the stockholder of the Proposed Nominee’s actual or potential unwillingness or inability to serve as a director; and (V) does not need any permission or consent from any third party (including any employer or any other board or governing body on which such Proposed Nominee serves) to serve as a director of the Corporation, if elected, that has not been obtained; (B) attaching copies of any and all requisite permissions or consents (including those obtained pursuant to the foregoing clause (A)(V)); and (C) attaching a completed Proposed Nominee questionnaire (which questionnaire shall be provided by the Corporation, upon request by the stockholder providing the notice, and shall include all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act, or would be required pursuant to the rules of any national securities exchange on which any securities of the Corporation are listed or over-the-counter market on which any securities of the Corporation are traded); and (ii) a certificate executed by the stockholder (A) certifying that such stockholder will (I) comply with Rule 14a-19 promulgated under the Exchange Act in connection with such stockholder’s solicitation of proxies in support of any Proposed Nominee; (II) notify the Corporation as promptly as practicable of any determination by the stockholder to no longer solicit proxies for the election of any Proposed Nominee as a director at the annual meeting; (III) furnish such other or additional information as the Corporation may request for the purpose of determining whether the requirements of this Section 11 have been satisfied or evaluating any nomination or other business described in the stockholder’s notice; and (IV) appear in person or by proxy at the meeting to present each Proposed Nominee or to bring such business before the meeting, as applicable, and (B) acknowledging that, if the stockholder does not so appear in person or by proxy at the meeting to present each Proposed Nominee or bring such business before the meeting, as applicable, the Corporation need not bring such Proposed Nominee or such business for a vote at such meeting and any proxies or votes cast in favor of the election of any Proposed Nominee or any proposal related to such other business need not be counted or considered.
(5) Notwithstanding anything in this subsection (a) of this Section 11 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased, and there is no public announcement of such action at least 130 days prior to the first anniversary of the date of the proxy statement (as defined in Section 11(c)(4) of this Article II) for the preceding year’s annual meeting, a stockholder’s notice required by clause (iii) of paragraph (a)(1) of this Section 11 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive office of the Corporation not later than 5:00 p.m., Mountain Time, on the tenth day following the day on which such public announcement is first made by the Corporation.
(6) For purposes of this Section 11, “Stockholder Associated Person” of any stockholder shall mean (i) any person acting in concert with such stockholder or another Stockholder Associated Person or who is otherwise a participant (as defined in Instruction 3 to Item 4 of Schedule 14A under the Exchange Act) in any solicitation of proxies, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary) and (iii) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such stockholder or such Stockholder Associated Person.
(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of individuals for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected only (i) by or at the direction of the Board of Directors or (ii) provided that the special meeting has been called in accordance with Section 3(a) of this Article II for the purpose of electing directors, by any stockholder of the Corporation who is a stockholder of record at the record date set by the Board of Directors for the purpose of determining stockholders entitled to vote at the special meeting, at the time of giving of notice provided for in this Section 11 and at the time of the special meeting (and any postponement or adjournment thereof), who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the notice procedures set forth in this Section 11. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more individuals to the Board of Directors, any stockholder may nominate an individual or individuals (as the case may be) for election as a director as specified in the Corporation’s notice of meeting, if the stockholder’s notice, containing the information and certifications required by paragraphs (a)(3) and (4) of this Section 11, is delivered to the secretary at the principal executive office of the Corporation not earlier than the 120th day prior to such special meeting and not later than 5:00 p.m., Mountain Time on the later of the 90th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. The public announcement of a postponement or adjournment of a special meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.
(c) General.
(1) If any information or certification submitted pursuant to this Section 11 by any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders, including any certification from a Proposed Nominee, shall be inaccurate in any material respect, such information may be deemed not to have been provided in accordance with this Section 11. Any such stockholder shall notify the Corporation of any inaccuracy or change (within two Business Days of becoming aware of such inaccuracy or change) in any such information or certification. Upon written request by the secretary or the Board of Directors, any stockholder or Proposed Nominee shall provide, within five Business Days of delivery of such request (or such other period as may be specified in such request), (i) written verification, satisfactory, in the discretion of the Board of Directors or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 11, (ii) a written update of any information (including, if requested by the Corporation, written confirmation by such stockholder that it continues to intend to bring such nomination or other business proposal before the meeting and, if applicable, satisfy the requirements of Rule 14a-19(a)(3) under the Exchange Act) submitted by the stockholder pursuant to this Section 11 as of an earlier date and (iii) an updated certification by each Proposed Nominee that such individual will serve as a director of the Corporation if elected. If a stockholder or a Proposed Nominee fails to provide such written verification, update or certification within such period, the information as to which such written verification, update or certification was requested may be deemed not to have been provided in accordance with this Section 11.
(2) Only such individuals who are nominated in accordance with this Section 11 shall be eligible for election by stockholders as directors, and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with this Section 11. A stockholder proposing a Proposed Nominee shall have no right to (i) nominate a number of Proposed Nominees that exceeds the number of directors to be elected at the meeting or (ii) substitute or replace any Proposed Nominee unless such substitute or replacement is nominated in accordance with this Section 11 (including the timely provision of all information and certifications with respect to such substitute or replacement Proposed Nominee in accordance with the deadlines set forth in this Section 11). If the Corporation provides notice to a stockholder that the number of Proposed Nominees proposed by such stockholder exceeds the number of directors to be elected at a meeting, the stockholder must provide written notice to the Corporation within five Business Days stating the names of the Proposed Nominees that have been withdrawn so that the number of Proposed Nominees proposed by such stockholder no longer exceeds the number of directors to be elected at a meeting. If any individual who is nominated in accordance with this Section 11 becomes unwilling or unable to serve on the Board of Directors, then the nomination with respect to such individual shall no longer be valid and no votes may validly be cast for such individual. The chairman of the meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 11.
(3) Notwithstanding the foregoing provisions of this Section 11, the Corporation shall disregard any proxy authority granted in favor of, or votes for, director nominees other than the Corporation’s nominees if the stockholder or Stockholder Associated Person (each, a “Soliciting Stockholder”) soliciting proxies in support of such director nominees abandons the solicitation or does not (i) comply with Rule 14a-19 promulgated under the
Exchange Act, including any failure by the Soliciting Stockholder to (A) provide the Corporation with any notices required thereunder in a timely manner or (B) comply with the requirements of Rule 14a-19(a)(2) and Rule 14a-19(a)(3) promulgated under the Exchange Act, or (ii) timely provide evidence in accordance with the following sentence that is sufficient, in the discretion of the Board of Directors, to demonstrate that such Soliciting Stockholder has met the requirements of Rule 14a-19(a)(3) promulgated under the Exchange Act. Upon request by the Corporation, such Soliciting Stockholder shall deliver to the Corporation, no later than five Business Days prior to the applicable meeting of stockholders, evidence that is sufficient, in the discretion of the Board of Directors, to demonstrate that such Soliciting Stockholder has met the requirements of Rule 14a-19(a)(3) promulgated under the Exchange Act.
(4) For purposes of this Section 11, “the date of the proxy statement” shall have the same meaning as “the date of the company’s proxy statement released to shareholders” as used in Rule 14a-8(e) promulgated under the Exchange Act, as interpreted by the Securities and Exchange Commission from time to time. “Public announcement” shall mean disclosure in (i) a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or other widely circulated news or wire service or (ii) a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act.
(5) Notwithstanding the foregoing provisions of this Section 11, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act with respect to the matters set forth in this Section 11. Nothing in this Section 11 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, or the right of the Corporation to omit a proposal from, any proxy statement filed by the Corporation with the Securities and Exchange Commission pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act. Nothing in this Section 11 shall require disclosure of revocable proxies received by, or routine solicitation contacts made by or on behalf of, the stockholder or Stockholder Associated Person pursuant to a solicitation of proxies after the filing of an effective Schedule 14A by such stockholder or Stockholder Associated Person under Section 14(a) of the Exchange Act.
(6) Notwithstanding anything in these Bylaws to the contrary, except as otherwise determined by the chairman of the meeting, if the stockholder giving notice as provided for in this Section 11 does not appear in person or by proxy at such annual or special meeting to present each nominee for election as a director or the proposed business, as applicable, such matter shall not be considered at the meeting.
Section 12. CONTROL SHARE ACQUISITION ACT. Notwithstanding any other provision of the Charter or these Bylaws, Title 3, Subtitle 7 of the Maryland General Corporation Law, or any successor statute (the “MGCL”), shall not apply to any acquisition by any person of shares of stock of the Corporation. This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition.
ARTICLE III
DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors.
Section 2. NUMBER, TENURE AND RESIGNATION. A majority of the entire Board of Directors may establish, increase or decrease the number of directors, provided that the number thereof shall never be less than the minimum number required by the MGCL, nor more than 15, and further provided that the tenure of office of a director shall not be affected by any decrease in the number of directors. Any director of the Corporation may resign at any time by delivering his or her resignation to the Board of Directors, the chairman of the board or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of Directors shall be held immediately after and at the same place as the annual meeting of stockholders, no notice other than this Bylaw being necessary. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. The Board of Directors may provide, by resolution, the time and place of regular meetings of the Board of Directors without other notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the chairman of the board, the chief executive officer, the president or a majority of the directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix the time and place of any special meeting of the Board of Directors called by them. The Board of Directors may provide, by resolution, the time and place of special meetings of the Board of Directors without other notice than such resolution.
Section 5. NOTICE. Notice of any special meeting of the Board of Directors shall be delivered personally or by telephone, electronic mail, facsimile transmission, United States mail or courier to each director at his or her business or residence address. Notice by personal delivery, telephone, electronic mail or facsimile transmission shall be given at least 24 hours prior to the meeting. Notice by United States mail shall be given at least three days prior to the meeting. Notice by courier shall be given at least two days prior to the meeting. Telephone notice shall be deemed to be given when the director or his or her agent is personally given such notice in a telephone call to which the director or his or her agent is a party. Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Corporation by the director. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the director and receipt of a completed answer-back indicating receipt. Notice by United States mail shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. Notice by courier shall be deemed to be given when deposited with or delivered to a courier properly addressed. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required by statute or these Bylaws.
Section 6. QUORUM. A majority of the directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, provided that, if less than a majority of such directors is present at such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to applicable law, the Charter or these Bylaws, the vote of a majority or other percentage of a specified group of directors is required for action, a quorum must also include a majority or such other percentage of such group.
The directors present at a meeting which has been duly called and at which a quorum has been established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough directors to leave fewer than required to establish a quorum.
Section 7. VOTING. The action of a majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws. If enough directors have withdrawn from a meeting to leave fewer than required to establish a quorum, but the meeting is not adjourned, the action of the majority of that number of directors necessary to constitute a quorum at such meeting shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws.
Notwithstanding the foregoing, until the earlier of (a) the one-year anniversary of the date that shares of Common Stock, $0.01 par value per share, of the Corporation (the “Common Shares”) are listed on a national securities exchange registered under Section 6 of the Exchange Act (a “Listing”) or (b) the date of any Liquidity Transaction (as defined below), any transaction between the Corporation and an affiliate of the Corporation that is required to be disclosed pursuant to Item 404 of Regulation S-K (or any successor provision) under the Securities Act of 1933, as amended, and the Exchange Act shall also be approved by the affirmative vote of (i) a majority of the directors not interested in the transaction and (ii) either (A) a majority of the Independent Directors (as defined below) or (B) a committee of the Board of Directors comprised solely of at least two Independent Directors. As used in these Bylaws, (x) the term “Liquidity Transaction” shall mean a sale, merger, recapitalization or other strategic transaction that is undertaken to provide liquidity to stockholders of the Corporation and (y) the term “Independent Director” shall mean, as of any given time, any member of the Board of Directors who has been determined by the Board of Directors to satisfy the independence standard or standards most recently utilized by the Board of Directors for purposes of Item 407 of Regulation S-K (or any successor provision) under the Securities Act of 1933, as amended, and the Exchange Act.
Section 8. ORGANIZATION. At each meeting of the Board of Directors, the chairman of the board or, in the absence of the chairman, the vice chairman of the board, if any, shall act as chairman of the meeting. In the absence of both the chairman and vice chairman of the board, the chief executive officer or, in the absence of the chief executive officer, the president or, in the absence of the president, a director chosen by a majority of the directors present, shall act as chairman of the meeting. The secretary or, in his or her absence, an assistant secretary of the Corporation, or, in the absence of the secretary and all assistant secretaries, an individual appointed by the chairman of the meeting, shall act as secretary of the meeting.
Section 9. MEETINGS BY REMOTE COMMUNICATION. Directors may participate in a meeting by means of a conference telephone or other means of remote communication if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.
Section 10. CONSENT BY DIRECTORS WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each director and is filed with the minutes of proceedings of the Board of Directors.
Section 11. VACANCIES. If for any reason any or all of the directors cease to be directors, such event shall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder. Except as may be provided by the Board of Directors in setting the terms of any class or series of preferred stock, any vacancy on the Board of Directors may be filled only by a majority of the remaining directors, even if the remaining directors do not constitute a quorum. Any director elected to fill a vacancy shall serve for the remainder of the full term of the class in which the vacancy occurred and until a successor is elected and qualifies.
Section 12. COMPENSATION. Directors shall not receive any stated salary for their services as directors but, by resolution of the Board of Directors, may receive compensation per year and/or per meeting and/or per visit to real property or other facilities owned or leased by the Corporation and for any service or activity they performed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any committee thereof and for their expenses, if any, in connection with each property visit and any other service or activity they perform or engage in as directors; but nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor.
Section 13. RELIANCE. Each director and officer of the Corporation shall, in the performance of his or her duties with respect to the Corporation, be entitled to rely on any information, opinion, report or statement, including any financial statement or other financial data, prepared or presented by an officer or employee of the Corporation whom the director or officer reasonably believes to be reliable and competent in the matters presented, by a lawyer, certified public accountant or other person, as to a matter which the director or officer reasonably believes to be within the person’s professional or expert competence, or, with respect to a director, by a committee of the Board of Directors on which the director does not serve, as to a matter within its designated authority, if the director reasonably believes the committee to merit confidence.
Section 14. CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. A director, officer, employee or agent shall have no responsibility to devote his or her full time to the affairs of the Corporation. Any director, officer, employee or agent, in his or her personal capacity or in a capacity as an affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar to, in addition to or in competition with those of or relating to the Corporation.
Section 15. RATIFICATION. The Board of Directors or the stockholders may ratify any act, omission, failure to act or determination made not to act (an “Act”) by the Corporation or its officers to the extent that the Board of Directors or the stockholders could have originally authorized the Act and, if so ratified, such Act shall have the same force and effect as if originally duly authorized, and such ratification shall be binding upon the Corporation and its stockholders. Any Act questioned in any proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a director, officer or stockholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting or otherwise, may be ratified, before or after judgment, by the Board of Directors or by the stockholders, and such ratification shall constitute a bar to any claim or execution of any judgment in respect of such questioned Act.
Section 16. EMERGENCY PROVISIONS. Notwithstanding any other provision in the Charter or these Bylaws, this Section 16 shall apply during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors under Article III of these Bylaws cannot readily be obtained (an “Emergency”). During any Emergency, unless otherwise provided by the Board of Directors, (a) a meeting of the Board of Directors or a committee thereof may be called by any director or officer by any means feasible under the circumstances; (b) notice of any meeting of the Board of Directors during such an Emergency may be given less than 24 hours prior to the meeting to as many directors and by such means as may be feasible at the time, including publication, television or radio, and (c) the number of directors necessary to constitute a quorum shall be one-third of the entire Board of Directors.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may appoint from among its members committees, composed of one or more directors, to serve at the pleasure of the Board of Directors. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member.
Section 2. POWERS. The Board of Directors may delegate to any committee appointed under Section 1 of this Article any of the powers of the Board of Directors, except as prohibited by law. Except as may be otherwise provided by the Board of Directors, any committee may delegate some or all of its power and authority to one or more subcommittees, composed of one or more directors, as the committee deems appropriate in its sole discretion.
Section 3. MEETINGS. Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Directors. A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee. The act of a majority of the committee members present at a meeting shall be the act of such committee. The Board of Directors may designate a chairman of any committee, and such chairman or, in the absence of a chairman, any two members of any committee (if there are at least two members of the committee) may fix the time and place of its meeting unless the Board shall otherwise provide.
Section 4. MEETINGS BY REMOTE COMMUNICATION. Members of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or other means of remote communication if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.
Section 5. CONSENT BY COMMITTEES WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each member of the committee and is filed with the minutes of proceedings of such committee.
Section 6. VACANCIES. Subject to the provisions hereof, the Board of Directors shall have the power at any time to change the membership of any committee, to appoint the chair of any committee, to fill any vacancy, to designate an alternate member to replace any absent or disqualified member or to dissolve any such committee.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Corporation shall include a president, a secretary and a treasurer and may include a chairman of the board, a vice chairman of the board, a chief executive officer, one or more vice presidents, a chief operating officer, a chief financial officer, one or more assistant secretaries and one or more assistant treasurers. In addition, the Board of Directors may from time to time elect such other officers with such powers and duties as it shall deem necessary or appropriate. The officers of the Corporation shall be elected annually by the Board of Directors, except that the chief executive officer or president may from time to time appoint one or more vice presidents, assistant secretaries and assistant treasurers or other officers. Each officer shall serve until his or her successor is elected and qualifies or until his or her death, or his or her resignation or removal in the manner hereinafter provided. Any two or more offices except president and vice president may be held by the same person. Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Corporation may be removed, with or without cause, by the Board of Directors if in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Corporation may resign at any time by delivering his or her resignation to the Board of Directors, the chairman of the board, the chief executive officer, the president or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Corporation.
Section 3. VACANCIES. A vacancy in any office may be filled by the Board of Directors for the balance of the term.
Section 4. CHAIRMAN OF THE BOARD. The Board of Directors may designate from among its members a chairman of the board, who shall not, solely by reason of these Bylaws, be an officer of the Corporation. The Board of Directors may designate the chairman of the board as an executive or non-executive chairman. The chairman of the board shall preside over the meetings of the Board of Directors. The chairman of the board shall perform such other duties as may be assigned to him or her by these Bylaws or the Board of Directors.
Section 5. CHIEF EXECUTIVE OFFICER. The Board of Directors may designate a chief executive officer. In the absence of such designation, the chairman of the board shall be the chief executive officer of the Corporation. The chief executive officer shall have general responsibility for implementation of the policies of the Corporation, as determined by the Board of Directors, and for the management of the business and affairs of the Corporation. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of chief executive officer and such other duties as may be prescribed by the Board of Directors from time to time.
Section 6. CHIEF OPERATING OFFICER. The Board of Directors may designate a chief operating officer. The chief operating officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.
Section 7. CHIEF FINANCIAL OFFICER. The Board of Directors may designate a chief financial officer. The chief financial officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.
Section 8. PRESIDENT. In the absence of a chief executive officer, the president shall in general supervise and control all of the business and affairs of the Corporation. In the absence of a designation of a chief operating officer by the Board of Directors, the president shall be the chief operating officer. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the Board of Directors from time to time.
Section 9. VICE PRESIDENTS. In the absence of the president or in the event of a vacancy in such office, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated at the time of their election or, in the absence of any designation, then in the order of their election) shall perform the duties of the president and when so acting shall have all the powers of and be subject to all the restrictions upon the president; and shall perform such other duties as from time to time may be assigned to such vice president by the chief executive officer, the president or the Board of Directors. The Board of Directors may designate one or more vice presidents as executive vice president, senior vice president, or vice president for particular areas of responsibility.
Section 10. SECRETARY. The secretary shall (a) keep the minutes of the proceedings of the stockholders, the Board of Directors and committees of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep a register of the address of each stockholder which shall be furnished to the secretary by such stockholder; (e) have general charge of the stock transfer books of the Corporation; and (f) in general perform such other duties as from time to time may be assigned to him or her by the chief executive officer, the president or the Board of Directors.
Section 11. TREASURER. The treasurer shall have the custody of the funds and securities of the Corporation, shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation, shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors and in general perform such other duties as from time to time may be assigned to him or her by the chief executive officer, the president or the Board of Directors. In the absence of a designation of a chief financial officer by the Board of Directors, the treasurer shall be the chief financial officer of the Corporation.
The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and Board of Directors, at the regular meetings of the Board of Directors or whenever it may so require, an account of all his or her transactions as treasurer and of the financial condition of the Corporation.
Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the chief executive officer, the president or the Board of Directors.
Section 13. COMPENSATION. The compensation of the officers shall be fixed from time to time by or under the authority of the Board of Directors and no officer shall be prevented from receiving such compensation by reason of the fact that he or she is also a director.
ARTICLE VI
CONTRACTS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Board of Directors may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Corporation when duly authorized or ratified by action of the Board of Directors and executed by an authorized person.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall from time to time be determined by the Board of Directors.
Section 3. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited or invested from time to time to the credit of the Corporation as the Board of Directors, the chief executive officer, the president, the chief financial officer, or any other officer designated by the Board of Directors may determine.
ARTICLE VII
STOCK
Section 1. CERTIFICATES. Except as may be otherwise provided by the Board of Directors or any officer of the Corporation, stockholders of the Corporation are not entitled to certificates representing the shares of stock held by them. In the event that the Corporation issues shares of stock represented by certificates, such certificates shall be in such form as prescribed by the Board of Directors or a duly authorized officer, shall contain the statements and information required by the MGCL and shall be signed by the officers of the Corporation in any manner permitted by the MGCL. In the event that the Corporation issues shares of stock without certificates, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates. There shall be no difference in the rights and obligations of stockholders based on whether or not their shares are represented by certificates.
Section 2. TRANSFERS. All transfers of shares of stock shall be made on the books of the Corporation in person or by his or her attorney, in such manner as the Board of Directors or any officer of the Corporation may prescribe and, if such shares are certificated, upon surrender of certificates duly endorsed. The issuance of a new certificate upon the transfer of certificated shares is subject to the determination of the Board of Directors or an officer of the Corporation that such shares shall no longer be represented by certificates. Upon the transfer of any uncertificated shares, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates.
The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by the laws of the State of Maryland.
Notwithstanding the foregoing, transfers of shares of any class or series of stock will be subject in all respects to the Charter and all of the terms and conditions contained therein.
Section 3. REPLACEMENT CERTIFICATE. Any officer of the Corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, destroyed, stolen or mutilated; provided, however, if such shares have ceased to be certificated, no new certificate shall be issued unless requested in writing by such stockholder and the Board of Directors or an officer of the Corporation has determined that such certificates may be issued. Unless otherwise determined by an officer of the Corporation, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or his or her legal representative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Corporation a bond in such sums as it may direct as indemnity against any claim that may be made against the Corporation.
Section 4. FIXING OF RECORD DATE. The Board of Directors may set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose. Such record date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the case of a meeting of stockholders, not less than ten days, before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken.
When a record date for the determination of stockholders entitled to notice of or to vote at any meeting of stockholders has been set as provided in this section, such record date shall continue to apply to the meeting if postponed or adjourned, except if the meeting is postponed or adjourned to a date more than 120 days after the record date originally fixed for the meeting, in which case a new record date for such meeting shall be determined as set forth herein.
Section 5. STOCK LEDGER. The Corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate stock ledger containing the name and address of each stockholder and the number of shares of each class held by such stockholder.
Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may authorize the Corporation to issue fractional shares of stock or authorize the issuance of scrip, all on such terms and under such conditions as it may determine. Notwithstanding any other provision of the Charter or these Bylaws, the Board of Directors may authorize the issuance of units consisting of different securities of the Corporation.
ARTICLE VIII
ACCOUNTING YEAR
The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution.
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions upon the stock of the Corporation may be authorized by the Board of Directors, subject to the provisions of law and the Charter. Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the Charter.
Section 2. CONTINGENCIES. Before payment of any dividend or other distribution, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its sole discretion, think proper as a reserve fund for contingencies, for equalizing dividends, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine, and the Board of Directors may modify or abolish any such reserve.
ARTICLE X
INVESTMENT POLICY
Subject to the provisions of the Charter, the Board of Directors may from time to time adopt, amend, revise or terminate any policy or policies with respect to investments by the Corporation as it shall deem appropriate in its sole discretion.
ARTICLE XI
SEAL
Section 1. SEAL. The Board of Directors may authorize the adoption of a seal by the Corporation. The seal shall contain the name of the Corporation and the year of its incorporation and the words “Incorporated Maryland.” The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.
Section 2. AFFIXING SEAL. Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of the Corporation.
ARTICLE XII
WAIVER OF NOTICE
Whenever any notice of a meeting is required to be given pursuant to the Charter or these Bylaws or pursuant to applicable law, a waiver thereof in writing or by electronic transmission, given by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice of such meeting, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or convened.
ARTICLE XIII
EXCLUSIVE FORUM FOR CERTAIN LITIGATION
Unless the Corporation consents in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that Court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any Internal Corporate Claim, as such term is defined in Section 1-101(p) of the MGCL, including, without limitation, (i) any action asserting a claim of breach of any duty owed by any director or officer or other employee of the Corporation to the Corporation or to the stockholders of the Corporation or (ii) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation arising pursuant to any provision of the MGCL, the Charter or these Bylaws, or (c) any other action asserting a claim against the Corporation or any director or officer or other employee of the Corporation that is governed by the internal affairs doctrine.
ARTICLE XIV
AMENDMENT OF BYLAWS
The Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws; provided, however, that, until the earlier of (a) the one-year anniversary of a Listing or (b) the date of any Liquidity Transaction, any amendment to the second paragraph of Article III, Section 7 of these Bylaws or this Article XIV shall require the approval of a majority of (i) the Board of Directors and (ii) the Independent Directors.
Adopted June 24, 2026.
Exhibit 10.1
EXECUTION VERSION
CONTRIBUTION AGREEMENT
This Contribution Agreement (this “Agreement”) is made as of June 24, 2026 (the “Effective Date”) by and between CIM Real Estate Finance Trust, Inc., a Maryland corporation (“CMFT”), and CIM Finance Holdings, LP, a Delaware limited partnership (“New OP”).
Recitals
A. CMFT is (i) the sole general partner and owns Partnership Units (as defined in the Existing OP Partnership Agreement (as defined below)) comprising 100% of the general partnership interest (the “Existing OP Contributed Interests”) in CIM Real Estate Finance Operating Partnership, LP, a Delaware limited partnership (“Existing OP”), and (ii) the manager and owns 100% of the limited liability company interests (the “CRI REIT IV Contributed Interests” and collectively with the Existing OP Contributed Interests, the “Contributed Interests”) in CRI REIT IV, LLC, a Delaware limited liability company (“CRI REIT IV”).
B. CIM Finance Holdings GP, LLC, a Delaware limited liability company and a direct and wholly owned subsidiary of CMFT, is the sole general partner of New OP and CMFT is the sole limited partner of New OP. As a result, CMFT, either directly or indirectly through a wholly owned subsidiary, owns 100% of the partnership interests in New OP. Pursuant to Section 7.1(e)(i) of the Amended and Restated Agreement of Limited Partnership of Existing OP, dated as of January 20, 2012 (as amended, the “Existing OP Partnership Agreement”), a general partner of Existing OP may transfer all or any portion of its general partnership interest in Existing OP to a wholly-owned subsidiary of such general partner.
C. In compliance with Section 7.1(e)(i) of the Existing OP Partnership Agreement, CMFT intends to contribute all of the Existing OP Contributed Interests to New OP.
D. CMFT and New OP are entering into this Agreement in order to effect the contribution of the Contributed Interests to New OP. Existing OP, by execution of this Agreement, acknowledges its waiver of the requirement in Section 7.2(c) of the Existing OP Partnership Agreement that a substitute general partner of Existing OP be admitted as such only if counsel for Existing OP shall have rendered an opinion that the admission of such substitute general partner is in conformity with the Delaware Revised Uniform Limited Partnership Act, as it may be amended from time to time, and that none of the actions taken in connection with the admission of such substitute general partner will cause the loss of any limited partner’s limited liability.
Agreement
Therefore, in consideration of the mutual covenants and agreements set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, CMFT and New OP agree as follows:
1. Contribution of the Existing OP Contributed Interests. Effective immediately, CMFT hereby transfers, assigns, and contributes the Existing OP Contributed Interests to New OP and, in exchange therefor, shall be admitted as a limited partner of New OP and receive a percentage interest in New OP equal to CMFT’s Percentage Interest (as defined in the Existing OP Partnership Agreement) immediately prior to the execution of this Agreement.
2. Contribution of the CRI REIT IV Contributed Interests. Effective immediately, CMFT hereby transfers, assigns, and contributes the CRI REIT IV Contributed Interests to New OP, and in exchange therefor, shall receive consideration of $9.00 to be paid by New OP to CMFT on the Effective Date, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.
3. Acceptance of the Contributed Interests. New OP hereby accepts the transfer, assignment and contribution of the Contributed Interests pursuant to Sections 1 and 2.
4. Consent to Contribution and Withdrawal. The parties hereto hereby acknowledge the foregoing assignment and contribution and consent to such assignment and contribution, and hereby further consent to the withdrawal of CMFT as the general partner of Existing OP and to the withdrawal of CMFT as a member and manager of CRI REIT IV. By execution of this Agreement by the parties hereto, (a) CMFT hereby withdraws from Existing OP as the general partner thereof, (b) New OP is hereby appointed as the sole general partner of Existing OP and hereby agrees to assume all obligations of the sole general partner of Existing OP and be bound by the terms and provisions of the Existing OP Partnership Agreement applicable to the sole general partner, (c) CMFT is hereby admitted as a limited partner of New OP and hereby agrees to assume all obligations of a limited partner of New OP and be bound by the terms and provisions of the Limited Partnership Agreement of New OP, dated as of May 8, 2026, applicable to limited partners, (d) CMFT hereby withdraws from CRI REIT IV as a member and manager thereof and (e) New OP is hereby appointed as the sole member and manager of CRI REIT IV and hereby agrees to assume all obligations of the sole member and manager of CRI REIT IV and be bound by the terms and provisions of the organizational documents of CRI REIT IV applicable to the sole member and manager.
5. Miscellaneous.
(a) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement. This Agreement may be executed and delivered by email or other electronic means (including PDF format) with the same force and effect as if the same were a fully executed and delivered manual counterpart.
(b) Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision, covenant or restriction of this Agreement is held by a court or other authority of competent jurisdiction to be invalid, void or unenforceable, or the application of such provision, covenant or restriction to any person or any circumstance, is held by a court or other authority of competent jurisdiction to be invalid, void or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision, covenant or restriction to other persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application of such provision, in any other jurisdiction and the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.
(c) Governing Law. This Agreement, and all actions (whether in contract, tort or statute) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of, related to, or in connection with this Agreement), shall be governed by, and enforced in accordance with, the laws of the State of Delaware, including its statutes of limitations, without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction (whether of the State of Delaware or any other jurisdiction) would be required thereby.
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above.
| CIM REAL ESTATE FINANCE TRUST, INC. | ||
| By: | /s/ Nathan DeBacker | |
| Name: | Nathan DeBacker | |
| Title: | Chief Financial Officer, Principal Accounting Officer and Treasurer | |
[Signature Page to the Contribution Agreement]
| CIM FINANCE HOLDINGS, LP | ||
| By: | CIM Finance Holdings GP, LLC | |
| Title: | General Partner | |
| By: | CIM Real Estate Finance Trust, Inc. | |
| Title: | Sole Member | |
| By: | /s/ Nathan DeBacker | |
| Name: | Nathan DeBacker | |
| Title: | Chief Financial Officer, Principal Accounting Officer and Treasurer | |
[Signature Page to the Contribution Agreement]
| ACKNOWLEDGED, FOR PURPOSES OF RECITAL D, BY: | ||
| CIM REAL ESTATE FINANCE OPERATING PARTNERSHIP, LP | ||
| By: | CIM Real Estate Finance Trust, Inc. | |
| Title: | General Partner | |
| By: | /s/ Nathan DeBacker | |
| Name: | Nathan DeBacker | |
| Title: | Chief Financial Officer, Principal Accounting Officer and Treasurer | |
[Signature Page to the Contribution Agreement]
Exhibit 10.2
EXECUTION VERSION
CONTRIBUTION AND SUBSCRIPTION AGREEMENT
by and among
CIM GROUP HOLDINGS, LLC,
CIM REAL ESTATE FINANCE TRUST, INC.,
and
CIM FINANCE HOLDINGS, LP
Dated as of June 24, 2026
TABLE OF CONTENTS
Page
| ARTICLE I | ||||||
| CONTRIBUTIONS AND ISSUANCES; CLOSING | ||||||
| Section 1.1 |
Contribution of the Contributed Interests; Payment of the Cash Consideration | 2 | ||||
| Section 1.2 |
Issuance of New OP Class A LP Units and CMFT Preferred Shares | 2 | ||||
| Section 1.3 |
Time and Place of Closing | 3 | ||||
| Section 1.4 |
Closing Documents | 3 | ||||
| Section 1.5 |
Earnout Payments | 4 | ||||
| ARTICLE II | ||||||
| REPRESENTATIONS AND WARRANTIES OF THE CIM CONTRIBUTOR | ||||||
| Section 2.1 |
Organization, Good Standing and Qualification | 8 | ||||
| Section 2.2 |
Authority; Approval | 8 | ||||
| Section 2.3 |
Ownership of Interests; Capitalization | 9 | ||||
| Section 2.4 |
Governmental Filings; No Violations | 9 | ||||
| Section 2.5 |
Financial Statements | 10 | ||||
| Section 2.6 |
Absence of Certain Changes | 11 | ||||
| Section 2.7 |
No Undisclosed Liabilities | 11 | ||||
| Section 2.8 |
Affiliate Transactions | 11 | ||||
| Section 2.9 |
Litigation | 12 | ||||
| Section 2.10 |
Compliance with Laws | 12 | ||||
| Section 2.11 |
Brokers and Finders | 12 | ||||
| Section 2.12 |
Investor Status | 13 | ||||
| Section 2.13 |
Taxes | 13 | ||||
| Section 2.14 |
Q2 2026 Distributions | 14 | ||||
| Section 2.15 |
CIM Pre-Closing Actions | 15 | ||||
| Section 2.16 |
Title to Assets | 15 | ||||
| ARTICLE III | ||||||
| REPRESENTATIONS AND WARRANTIES OF CMFT | ||||||
| Section 3.1 |
Organization, Good Standing and Qualification | 16 | ||||
| Section 3.2 |
Authority; Approval | 16 | ||||
| Section 3.3 |
Ownership of Interests; Capitalization | 16 | ||||
| Section 3.4 |
Governmental Filings; No Violations | 18 | ||||
| Section 3.5 |
SEC Filings | 18 | ||||
| Section 3.6 |
Financial Statements | 19 | ||||
| Section 3.7 |
Absence of Certain Changes | 20 | ||||
| Section 3.8 |
No Undisclosed Liabilities | 20 | ||||
i
| Section 3.9 |
Affiliate Transactions |
20 | ||||
| Section 3.10 |
Litigation |
21 | ||||
| Section 3.11 |
Compliance with Laws |
21 | ||||
| Section 3.12 |
Brokers and Finders |
21 | ||||
| Section 3.13 |
Exemption of New OP Class A LP Units and CMFT Preferred Shares |
21 | ||||
| Section 3.14 |
Taxes |
22 | ||||
| Section 3.15 |
CMFT Pre-Closing Actions |
24 | ||||
| ARTICLE IV | ||||||
| POST-CLOSING COVENANTS | ||||||
| Section 4.1 |
Confidentiality |
24 | ||||
| Section 4.2 |
Publicity |
25 | ||||
| Section 4.3 |
Release |
25 | ||||
| Section 4.4 |
Tax Matters |
27 | ||||
| Section 4.5 |
Exchange Listing |
28 | ||||
| Section 4.6 |
Additional Capital Investment |
28 | ||||
| Section 4.7 |
Alternative Recapitalization Transaction |
29 | ||||
| Section 4.8 |
Alternative Opportunities |
29 | ||||
| Section 4.9 |
CMFT Dividends; New OP Earnout Special Distributions; Minimum Guaranteed New OP Distributions |
30 | ||||
| Section 4.10 |
Pre-Closing Actions |
31 | ||||
| Section 4.11 |
Key Corporate Documents; Post-Closing CMFT Governance |
31 | ||||
| Section 4.12 |
Employee Matters |
32 | ||||
| Section 4.13 |
Specified Actions |
34 | ||||
| Section 4.14 |
Specified Acquisitions |
34 | ||||
| Section 4.15 |
Further Assurances |
34 | ||||
| ARTICLE V | ||||||
| INDEMNIFICATION | ||||||
| Section 5.1 |
Survival |
34 | ||||
| Section 5.2 |
Indemnification |
35 | ||||
| Section 5.3 |
Claim Procedures |
36 | ||||
| Section 5.4 |
Losses and Recoveries |
39 | ||||
| Section 5.5 |
Payments |
40 | ||||
| Section 5.6 |
Minimizing and Mitigating Losses |
41 | ||||
| Section 5.7 |
Exclusive Remedies |
41 | ||||
ii
| ARTICLE VI | ||||||
| MISCELLANEOUS AND GENERAL | ||||||
| Section 6.1 |
No Other Representations or Warranties |
42 | ||||
| Section 6.2 |
Amendment; Waiver |
43 | ||||
| Section 6.3 |
Expenses |
43 | ||||
| Section 6.4 |
Counterparts |
43 | ||||
| Section 6.5 |
GOVERNING LAW; ARBITRATION |
43 | ||||
| Section 6.6 |
Notices |
44 | ||||
| Section 6.7 |
Entire Agreement |
45 | ||||
| Section 6.8 |
No Third-Party Beneficiaries |
45 | ||||
| Section 6.9 |
Obligations of New OP and of CMFT |
46 | ||||
| Section 6.10 |
Severability |
46 | ||||
| Section 6.11 |
Interpretation; Construction |
46 | ||||
| Section 6.12 |
Successors and Assigns |
47 | ||||
| Section 6.13 |
No Rights Against Nonparties |
48 | ||||
| Section 6.14 |
Waiver of Conflicts Regarding Representation; Nonassertion of Attorney-Client Privilege |
48 | ||||
Exhibits
| Exhibit A: | Definitions | |
| Exhibit B: | Form of New OP Limited Partnership Agreement | |
| Exhibit C: | Form of Registration Rights Agreement | |
| Exhibit D: | Form of Tax Receivable Agreement | |
| Exhibit E: | Form of Existing OP Limited Partnership Agreement | |
| Exhibit F: | Form of CMFT Articles Supplementary | |
| Exhibit G: | Form of CMFT Bylaws | |
| Exhibit H: | CMFT Pre-Closing Actions |
Annexes
| Annex A: | Earnout Definitions and Principles | |
| Annex B: | Earnout Payment Schedule |
iii
CONTRIBUTION AND SUBSCRIPTION AGREEMENT
This CONTRIBUTION AND SUBSCRIPTION AGREEMENT (this “Agreement”), dated as of June 24, 2026 (the “Execution Date”), is made by and among CIM Group Holdings, LLC, a Delaware limited liability company (“CIM Group Holdings” or the “CIM Contributor”), CIM Real Estate Finance Trust, Inc., a Maryland corporation (“CMFT”), and CIM Finance Holdings, LP, a Delaware limited partnership and a direct, wholly-owned Subsidiary of CMFT (“New OP”). CIM Group Holdings, CMFT and New OP are collectively referred to as the “Parties” and each individually as a “Party”.
RECITALS
WHEREAS, the CIM Contributor owns one hundred percent (100%) of the issued and outstanding limited liability company interests of CIM Group Management, LLC, a Delaware limited liability company (“CIM Group Management”) and one hundred percent (100%) of the issued and outstanding limited liability company interests of CIM Group Investments, LLC, a Delaware limited liability company (“CIM Group Investments”, and together with CIM Group Management, the “Contributed Entities”);
WHEREAS, the CIM Contributor desires to (i) contribute, assign, convey, transfer and deliver to New OP all of the limited liability company interests in CIM Group Management owned by the CIM Contributor (the “CIM Group Management Interests”) and all of the limited liability company interests in CIM Group Investments owned by the CIM Contributor (the “CIM Group Investments Interests”, and together with the CIM Group Management Interests, the “Contributed Interests”) and (ii) deliver to CMFT by wire transfer, to an account designated by CMFT, immediately available funds in an aggregate amount equal to $1,000 (the “Cash Consideration”), in each case, upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, (i) in consideration for the CIM Contributor’s contribution and transfer of the Contributed Interests to New OP, New OP desires to issue to the CIM Contributor, and the CIM Contributor desires to subscribe for, New OP Class A-1 LP Units and New OP Class A-2 LP Units (collectively, the “New OP Class A LP Units”), and (ii) in consideration for the CIM Contributor’s payment of the Cash Consideration to CMFT, and to further induce the CIM Contributor’s contribution which will be a direct benefit to CMFT, CMFT desires to issue to the CIM Contributor, and the CIM Contributor desires to subscribe for, shares of Special Voting Preferred Stock, par value $0.01 per share, of CMFT (“CMFT Preferred Shares”), in each case, upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, immediately prior to the consummation of the transactions described in the foregoing recitals, the CIM Contributor will have acquired the Contributed Interests and the Specified Interests as part of a corporate reorganization (such acquisition, the “CIM Pre-Closing Actions”);
WHEREAS, immediately prior to the consummation of the transactions described in the foregoing recitals, CMFT, New OP and their respective Subsidiaries will have undertaken and consummated the actions set forth in Exhibit H upon the terms and conditions set forth therein (collectively, the “CMFT Pre-Closing Actions”); and
WHEREAS, the Parties desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, the Parties, intending to be legally bound, agree as follows:
ARTICLE I
CONTRIBUTIONS AND ISSUANCES; CLOSING
Section 1.1 Contribution of the Contributed Interests; Payment of the Cash Consideration. (a) The CIM Contributor hereby contributes, assigns, conveys, transfers and delivers the Contributed Interests to New OP, and New OP hereby accepts the Contributed Interests from the CIM Contributor, free and clear of Liens (other than transfer restrictions imposed by securities Laws or the Organizational Documents of the Contributed Entities) (such contribution, the “CIM Contribution”), (b) immediately after the consummation of the CIM Contribution, the CIM Contributor shall deliver to CMFT by wire transfer, to an account designated by CMFT, immediately available funds in an aggregate amount equal to $1,000, and (c) immediately preceding any issuance of CMFT Preferred Shares pursuant to Section 1.2(c), the CIM Contributor shall deliver to CMFT by wire transfer, to an account designated by CMFT, immediately available funds in an aggregate amount equal to the product of (i) $1,000 multiplied by (ii) the quotient of (x) the Earnout Amount divided by (y) the number of CMFT Preferred Shares issuable pursuant to Section 1.2(b) (any such consideration, the “Additional Cash Consideration”).
Section 1.2 Issuance of New OP Class A LP Units and CMFT Preferred Shares.
(a) In consideration for the contribution of the Contributed Interests:
(i) Immediately following the contribution of the Contributed Interests, New OP shall issue to the CIM Contributor 821,175,346.665 New OP Class A-1 LP Units and 86,200,726.998 New OP Class A-2 LP Units.
(ii) If and when due (pursuant to and to the extent required by Section 1.5), New OP shall issue to the CIM Contributor (A) a number of New OP Class A-1 LP Units equal to the product of the New OP Class A-1 Percentage multiplied by the Earnout Amount and (B) a number of New OP Class A-2 LP Units equal to the product of the New OP Class A-2 Percentage multiplied by the Earnout Amount.
(b) In consideration for the payment of the Cash Consideration and as inducement of the CIM Contribution, CMFT shall issue 907,376,073.663 CMFT Preferred Shares to the CIM Contributor immediately following the payment of the Cash Consideration.
-2-
(c) In consideration for the payment of the Additional Cash Consideration, CMFT shall issue to the CIM Contributor a number of CMFT Preferred Shares representing CMFT Preferred Votes equal to the Earnout Amount if and when due (pursuant to and to the extent required by Section 1.5).
Section 1.3 Time and Place of Closing. The closing of the contributions, payments and issuances described in Section 1.1, Section 1.2(a)(i) and Section 1.2(b) shall take place remotely via the exchange of documents electronically, on the date hereof, immediately following the effectiveness of this Agreement (the “Closing”). The “Closing Date” will be the date on which the Closing occurs.
Section 1.4 Closing Documents.
(a) By the CIM Contributor. At the Closing, the CIM Contributor shall deliver to CMFT each of the following:
(i) a duly executed counterpart of the New OP Limited Partnership Agreement;
(ii) a duly executed counterpart of the Registration Rights Agreement;
(iii) a duly executed counterpart of the Tax Receivable Agreement;
(iv) a certificate duly executed by the secretary (or other officer) of the CIM Contributor, certifying that attached thereto are complete copies of (A) the Organizational Documents of the CIM Contributor, and each Contributed Entity, and (B) resolutions of the sole member (or their respective equivalents) of the CIM Contributor authorizing the execution, delivery, and performance of this Agreement, the other Transaction Documents and consummation of the Transactions, and such resolutions are in full force and effect;
(v) a copy of the contribution agreement by and among the CIM Contributor and other parties thereto evidencing the consummation of the CIM Pre-Closing Actions, duly executed by the parties thereto; and
(vi) evidence of the receipt of consent from, or expiration of the applicable notice period with respect to, each of the filings, notices, reports, consents, registrations, approvals, permits and authorizations made under the HSR Act and FINRA Rule 1017 in connection with this Agreement, the other Transaction Documents and the consummation of the Transactions.
(b) By New OP. At the Closing, New OP shall deliver to the CIM Contributor:
(i) a certificate, dated as of the Closing Date and in the form specified by Section 2.6 of the New OP Limited Partnership Agreement, certifying the number of New OP Class A LP Units to be issued to the CIM Contributor; and
-3-
(ii) a fully executed copy of the Existing OP Limited Partnership Agreement.
(c) By CMFT. At the Closing, CMFT shall deliver to the CIM Contributor:
(i) a certificate, dated as of the Closing Date and signed by an authorized officer of CMFT, certifying the number of CMFT Preferred Shares to be issued to it at the Closing and that attached thereto are true, correct and complete copies of the items referred to in clauses (iii) through (iv) below;
(ii) a copy, certified by the State Department of Assessments and Taxation of Maryland (the “Department”) of the Charter, including the CMFT Articles of Amendment and the Articles Supplementary;
(iii) a copy of the CMFT Bylaws, as amended as of the Closing Date;
(iv) a resolution duly adopted by the board of directors of CMFT (the “CMFT Board”) providing for the termination of its status as a REIT under the Code;
(v) a duly executed counterpart of the New OP Limited Partnership Agreement;
(vi) a duly executed counterpart of the Registration Rights Agreement; and
(vii) a duly executed counterpart of the Tax Receivable Agreement.
Section 1.5 Earnout Payments. Subject to the terms and conditions in this Section 1.5, New OP and CMFT shall make the issuances determined pursuant to this Section 1.5 as additional consideration for the contribution of the Contributed Interests and payment of the Cash Consideration, if and to the extent that the conditions set forth in Section 1.5(a) are achieved, and such New OP Class A LP Units and CMFT Preferred Shares issuable as part of the Earnout Amount will be issued to the CIM Contributor pursuant to the procedures described in Section 1.5(b) below.
(a) Calculation of Earnout Amount; Earnout Period Covenants.
(i) If, during the Earnout Period, CMFT, New OP and their respective Subsidiaries have achieved Fee-Related Revenues in an amount within any of the ranges described in Annex B hereto (the “Earnout Payment Schedule”), then, on the Earnout Amount Payment Date, New OP shall issue a number of New OP Class A LP Units, and CMFT shall issue an equivalent number of CMFT Preferred Shares, to the CIM Contributor equal to the amount corresponding to such Fee-Related Revenues amount in the Earnout Payment Schedule. The aggregate amount of New OP Class A LP Units due to the CIM Contributor pursuant to this Section 1.5(a), which shall also equal the number of CMFT Preferred Votes associated with the CMFT Preferred Shares due to the CIM Contributor pursuant to this Section 1.5(a), shall be the “Earnout Amount” for all purposes of this Agreement.
-4-
(ii) The Fee-Related Revenues and the Earnout Amount shall be calculated in accordance with this Agreement, including the Earnout Definitions and Principles and the Fee-Related Revenues Calculation, and shall be determined using the same accounting principles, practices, procedures, policies and methods, and with consistent classifications, judgments, inclusions, exclusions and valuation and estimation methodologies, in each case as employed in the preparation of the Fee-Related Revenues Calculation. From the Closing until the final determination of the Earnout Statement and payment of the Earnout Amount (if any), (A) CMFT shall provide the CIM Contributor and its Representatives with reasonable access during business hours to the personnel, properties, books and records of CMFT, New OP and their respective Subsidiaries and to any other information reasonably requested, in each case, for purposes of the CIM Contributor’s review of the Earnout Statement and determination of the Earnout Amount, and (B) none of CMFT, New OP nor any of their respective Subsidiaries shall take any action (or fail to take any action) that (1) is specifically intended to, (2) has the primary purpose to, or (3) except to the extent such action is taken in the ordinary course of business or is otherwise motivated by bona fide business considerations, would be reasonably expected to, in each case of clauses (1) through (3), frustrate or prevent the achievement of the Earnout Target or reduce or avoid payment of the Earnout Amount.
(b) Earnout Statement; Earnout Payment Procedures.
(i) On or prior to the Earnout Statement Deadline, CMFT shall prepare, or cause to be prepared, and deliver to the CIM Contributor a statement (the “Earnout Statement”) setting forth in writing CMFT’s (A) good faith calculation of the Fee-Related Revenues during the Earnout Period (expressed as a dollar amount and as a percentage of the Earnout Target) and (B) the Earnout Amount (if any) resulting therefrom expressed as the relevant percentage of the Outstanding New OP LP Unit Count set forth on the Earnout Payment Schedule, and such statement shall have been prepared in accordance with the terms of this Agreement, including the definitions, adjustment and calculation principles attached hereto as Annex A (the “Earnout Definitions and Principles”) and the Fee-Related Revenues calculation provided by the CIM Contributor to CMFT prior to the date hereof (the “Fee-Related Revenues Calculation”) and previously reviewed by the CMFT Independent Directors who may, at CMFT’s expense, retain and consult with such financial, legal, and other advisors as the CMFT Independent Directors may deem necessary or appropriate in connection with such review.
(ii) Within twenty (20) days after the Earnout Statement is delivered to the CIM Contributor, the CIM Contributor shall review and respond to the Earnout Statement by delivering written notice to CMFT, indicating either that such Earnout Statement shall be final and binding for purposes of this Section 1.5(b) or specifying the scope of its disagreement with the information contained in the Earnout Statement. If the CIM Contributor objects to the calculation of the Fee-Related Revenues included in the determination of the Earnout Amount (such written notice, the “Earnout Statement Objection”), then the Earnout Statement Objection shall set forth a description of the basis
-5-
of such objection and the adjustments to the calculation of the Fee-Related Revenues or Earnout Amount, as applicable, that the CIM Contributor believes should be made. The CIM Contributor may dispute items reflected in the Earnout Statement on the basis that (A) they were not prepared in accordance with the requirements set forth in this Agreement (including the exhibits, annexes and schedules hereto), (B) the Earnout Statement or any amounts set forth therein contain mathematical errors, or (C) the Earnout Statement or any amounts set forth therein were derived from the misapplication of the Earnout Definitions and Principles or failure to apply the Earnout Definitions and Principles in a consistent manner or in a manner inconsistent with the Fee-Related Revenues Calculation.
(iii) If no Earnout Statement Objection is delivered to CMFT pursuant to Section 1.5(b)(ii) above within such twenty (20) day period, then the CIM Contributor shall be deemed to have accepted the Earnout Statement, and the Earnout Statement, together with the calculations of Fee-Related Revenues and the Earnout Amount set forth therein, shall be deemed to be final and binding for all purposes of this Agreement. If an Earnout Statement Objection is delivered to CMFT pursuant to Section 1.5(b)(ii) above, then CMFT and the CIM Contributor shall promptly attempt in good faith to resolve any dispute or disagreement relating to the Fee-Related Revenues or Earnout Amount, as applicable (an “Earnout Statement Dispute”).
(iv) If CMFT and the CIM Contributor are able to resolve every item in an Earnout Statement Dispute within twenty (20) days after the delivery of the Earnout Statement Objection to CMFT, then CMFT and the CIM Contributor shall mutually agree on a revised Earnout Statement reflecting such agreement, and such revised Earnout Statement, together with the calculations of Fee-Related Revenues and the Earnout Amount set forth therein, shall be deemed to be final and binding for all purposes of this Agreement. If CMFT and the CIM Contributor are unable to resolve every item in an Earnout Statement Dispute within twenty (20) days after the delivery of the Earnout Statement Objection to CMFT, then the CIM Contributor may within twenty (20) days of the expiration of such twenty (20)-day period elect by delivering written notice to CMFT (such written notice, the “Neutral Accountant Election”) to have unresolved items in such Earnout Statement Dispute resolved by the Neutral Accountant, who shall, acting as an expert and not as an arbitrator, determine on the basis of the criteria set forth in this Section 1.5(b)(iv), and only with respect to the accounting-related differences submitted to the Neutral Accountant by the CIM Contributor (and not by independent review), whether and to what extent, if any, the Fee-Related Revenues or Earnout Amount, as applicable, as derived from the Earnout Statement, requires adjustment. In connection with the engagement of the Neutral Accountant, each Party shall promptly execute engagement letters and supply such other documents and information as the Neutral Accountant reasonably requires; provided, however, that no Party shall be obligated to make any working papers available to the Neutral Accountant unless and until the Neutral Accountant has signed a customary confidentiality and hold harmless agreement relating to such access to working papers in form and substance reasonably acceptable to such Party. The CIM Contributor and CMFT shall each use commercially reasonable efforts to select and engage the Neutral Accountant within twenty (20) days of the delivery of the Neutral Accountant Election and shall provide the Neutral Accountant, within ten (10) days of its selection and engagement, with a definitive statement of their respective positions
-6-
with respect to each unresolved objection and disagreement. CMFT shall provide the Neutral Accountant with access to the books and records of CMFT and New OP and their respective Subsidiaries related to the calculation of the Fee-Related Revenues and the Earnout Amount. The Neutral Accountant shall be instructed to render its determination with respect to the Earnout Statement Dispute as soon as practicable after such submission (which the Parties agree shall not be later than 30 days following the formal engagement of the Neutral Accountant, or such other date as mutually agreed by the CIM Contributor and CMFT). In resolving an Earnout Statement Dispute, the Neutral Accountant shall not assign a value to any item greater than the greatest value for such item claimed by any Party, or less than the smallest value for such item claimed by any Party, as presented to the Neutral Accountant pursuant to this Agreement. The Earnout Statement (including the calculations of Fee-Related Revenues and the Earnout Amount set forth therein), as each may be adjusted by the Neutral Accountant’s resolution of an Earnout Statement Dispute, shall be deemed to be final and binding for all purposes of this Agreement and shall be non-appealable by the Parties, absent fraud or manifest error. The fees and expenses of the Neutral Accountant in connection with the services provided pursuant to this Section 1.5(b)(iv) shall be allocated among CMFT and the CIM Contributor such that CMFT, on the one hand, and the CIM Contributor, on the other hand, pays an amount equal to the product of (A) the total amount of such fees and expenses multiplied by (B) a fraction, (I) the numerator of which is (x) in the case of the CIM Contributor, the portion of the total increase to the Earnout Amount requested by the CIM Contributor that is not awarded to the CIM Contributor and (y) in the case of CMFT, the portion of the total increase to the Earnout Amount requested by the CIM Contributor that is awarded to the CIM Contributor and (II) the denominator of which is the total increase to the Earnout Amount requested by the CIM Contributor.
(v) No later than five (5) Business Days after the date on which the Earnout Statement becomes final and binding pursuant to Section 1.5(b)(iii) or Section 1.5(b)(iv), the Parties shall promptly calculate the final Earnout Amount based on the actual Outstanding New OP LP Unit Count (but otherwise in accordance with the final and binding Earnout Statement) and:
(A) New OP shall issue to the CIM Contributor (x) a number of New OP Class A-1 LP Units equal to the product of the New OP Class A-1 Percentage multiplied by the Earnout Amount, and (y) a number of New OP Class A-2 LP Units equal to the product of the New OP Class A-2 Percentage multiplied by the Earnout Amount; and
(B) CMFT shall issue to the CIM Contributor a number of CMFT Preferred Shares representing CMFT Preferred Votes equal to the Earnout Amount.
The date on which the Earnout Amount issuance is actually made pursuant to this Section 1.5(b) shall be referred to herein as the “Earnout Amount Payment Date”.
-7-
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE CIM CONTRIBUTOR
Except as set forth in the corresponding sections or subsections of the disclosure letter delivered to CMFT by the CIM Contributor on or prior to the Execution Date (the “CIM Disclosure Letter”) (it being agreed that disclosure of any item in any section or subsection of the CIM Disclosure Letter shall also be deemed disclosure with respect to any other section or subsection of this Agreement to which the relevance of such item is reasonably apparent on its face), the CIM Contributor hereby represents and warrants to CMFT as of the Closing Date (or in the case of representations and warranties that speak of a specified date, as of such specified date) as follows:
Section 2.1 Organization, Good Standing and Qualification.
(a) The CIM Contributor and the Contributed Entities each (a) is a legal entity duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization, (b) has all requisite limited liability company power, corporate power or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and (c) is qualified to do business and, to the extent such concept is applicable, is in good standing as a foreign corporation or other legal entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except, in the case of clause (c), as would not, individually or in the aggregate, reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole.
(b) Except as would not, individually or in the aggregate, reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole, the Subsidiaries of the Contributed Entities each (a) is a legal entity duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization, (b) has all requisite limited liability company power, corporate power or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and (c) is qualified to do business and, to the extent such concept is applicable, is in good standing as a foreign corporation or other legal entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification.
Section 2.2 Authority; Approval. The CIM Contributor has all requisite limited liability company power and authority necessary to enter into and perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party and has taken all limited liability company action necessary in order to execute, deliver and perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party. This Agreement has been, and each of the other Transaction Documents to which the CIM Contributor is a party will be at the Closing, duly executed and delivered by the CIM Contributor and, when executed and delivered by CMFT, New OP and the other parties hereto and thereto, will constitute a valid and binding agreement of the CIM Contributor, enforceable against the CIM Contributor in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance, preferential transfer, reorganization, moratorium and similar Laws relating to or affecting creditors’ rights and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) (the “Bankruptcy and Equity Exception”).
-8-
Section 2.3 Ownership of Interests; Capitalization.
(a) The CIM Contributor is the sole record and beneficial owner of the Contributed Interests as of immediately prior to the Closing. The CIM Contributor has good and valid title to the Contributed Interests owned by it, free and clear of all Liens (other than transfer restrictions imposed by securities Laws or the Organizational Documents of the Contributed Entities) as of immediately prior to the Closing, and upon delivery by the CIM Contributor of the Contributed Interests to New OP at the Closing, good and valid title to all of the Contributed Interests will pass to New OP.
(b) Section 2.3(b) of the CIM Disclosure Letter sets forth a true, correct and complete listing of the percentage ownership of the Contributed Interests held by the CIM Contributor as of immediately prior to the Closing. As of the Closing Date, except for the Contributed Interests, there are no other limited liability company interests or other equity interests of the Contributed Entities issued and outstanding. All outstanding equity interests in the Subsidiaries of the Contributed Entities have been duly authorized and are validly issued, fully paid and nonassessable. Each outstanding equity interest of the Subsidiaries of the Contributed Entities is held, directly or indirectly, by the CIM Contributor, and upon delivery of the Contributed Interests to New OP, New OP will hold, directly or indirectly, all of the issued and outstanding equity interests of each Subsidiary of the Contributed Entities.
(c) There are no preemptive or other outstanding rights, options, warrants, agreements, arrangements or commitments of any character under which the CIM Contributor, the Contributed Entities or any of their respective Subsidiaries is or may become obligated to sell, or giving any Person a right to acquire, or in any way dispose of, any of the Contributed Interests or other securities of the Contributed Entities or any of their respective Subsidiaries or any securities or obligations exercisable or exchangeable for, or convertible into, any securities of the Contributed Entities or any of their respective Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding. Except for this Agreement and the Organizational Documents of the CIM Contributor and its Subsidiaries, the CIM Contributor, the Contributed Entities and their respective Subsidiaries are not parties to any Contracts with respect to the voting, purchase, dividend rights, disposition or transfer of the Contributed Interests or other equity securities of the Contributed Entities or any of their respective Subsidiaries.
Section 2.4 Governmental Filings; No Violations.
(a) Other than the expirations of waiting periods and the filings, notices, reports, consents, registrations, approvals, permits and authorizations under the HSR Act and FINRA Rule 1017, no notices, reports or other filings are required to be made by the CIM Contributor, the Contributed Entities or any of their respective Subsidiaries with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by the CIM Contributor, the Contributed Entities or any of their respective Subsidiaries from, any Governmental Entity in connection with the execution, delivery and performance of this Agreement and the other Transaction Documents by the CIM Contributor and the consummation of the Transactions, except those that the failure to make or obtain would not reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole.
-9-
(b) The execution, delivery and performance by the CIM Contributor of this Agreement and the other Transaction Documents to which the CIM Contributor is a party do not, and the consummation of the Transactions will not, conflict with, or result in any breach or violation of or default (with or without notice, lapse of time, or both) under, or give rise to any right of termination, loss of rights, adverse modification of provisions, cancellation or acceleration of any obligations under, or result in the creation of a Lien on any of the assets of the CIM Contributor, the Contributed Entities or any of their respective Subsidiaries under any provision of (i) the Organizational Documents of the CIM Contributor, the Contributed Entities or any of their respective Subsidiaries, (ii) any Contract binding upon the CIM Contributor, the Contributed Entities or any of their respective Subsidiaries or (iii) assuming (solely with respect to performance of this Agreement and the other Transaction Documents and consummation of the Transactions) compliance with the matters referred to in Section 2.4(a), any Law to which the CIM Contributor, the Contributed Entities or any of their respective Subsidiaries is subject except, in the case of clauses (ii) and (iii) above, for any such breach, violation, default, termination, loss, adverse modification, cancellation, acceleration or creation that would not reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole.
Section 2.5 Financial Statements.
(a) Set forth in Section 2.5(a) of the CIM Disclosure Letter are true, correct and complete copies of the following financial statements (with respect to each Contributed Entity, “Financial Statements”): (i) the audited balance sheets of each Contributed Entity and such Contributed Entity’s consolidated Subsidiaries as of December 31, 2023, December 31, 2024 and December 31, 2025, and the related audited consolidated statements of income (loss) for each of the twelve (12) month periods then ended; and (ii) the unaudited consolidated balance sheets of each Contributed Entity and such Contributed Entity’s consolidated Subsidiaries as of March 31, 2026 (with respect to each Contributed Entity, the “Interim Balance Sheet”), and the related unaudited consolidated statements of income (loss) for the three (3) month period then ended (the “Interim Income Statement”, and together with the Interim Balance Sheet, the “Interim Financial Statements”).
(b) The consolidated balance sheets and consolidated statements of income (loss) included in the Financial Statements of each Contributed Entity (including any related notes and schedules thereto) fairly present in all material respects the financial condition and results of operations, as applicable, of such Contributed Entity and its consolidated Subsidiaries as of the dates or for the periods set forth therein, in each case in accordance with GAAP, consistently applied during the periods involved, except as may be noted therein and, in the case of the Interim Financial Statements, subject to the absence of footnote disclosure and normal year-end adjustments.
-10-
(c) Each Contributed Entity maintains a system of internal accounting controls sufficient, in all material respects, to provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, except as would not reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole.
(d) Since December 31, 2023, no Contributed Entity has identified any material weakness or significant deficiency in the design or operation of its internal controls over financial reporting that would reasonably be expected to materially and adversely affect the ability of such Contributed Entity to record, process, summarize and report financial information for inclusion in the Financial Statements of such Contributed Entity. Since December 31, 2023, no fraud, whether or not material, has occurred that involves any member of management or any employee who has a significant role in the internal controls or financial reporting of any Contributed Entity. Since December 31, 2023, no Contributed Entity has received any material written complaint, allegation, assertion or claim regarding accounting, internal accounting controls, internal controls over financial reporting or auditing matters, except as would not reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole.
Section 2.6 Absence of Certain Changes. Since December 31, 2025, the Contributed Entities and their respective Subsidiaries have conducted their respective businesses in the ordinary course of such businesses, consistent with past practices in all material respects (other than in connection with the CIM Pre-Closing Actions, the CMFT Pre-Closing Actions or the Transactions), except as would not reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole.
Section 2.7 No Undisclosed Liabilities. No Contributed Entity nor any of such Contributed Entity’s Subsidiaries has any obligations or liabilities (whether accrued, absolute, contingent, unknown or otherwise) required under GAAP to be reflected or reserved against in the consolidated balance sheet of such Contributed Entity that would reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole, other than liabilities that (a) have been adequately reserved against or reflected in the Financial Statements of such Contributed Entity, (b) were incurred since March 31, 2026 in the ordinary course of business consistent with past practice, (c) have been incurred pursuant to the Transaction Documents or in connection with the Transactions or (d) have been incurred in the performance of obligations under Contracts to which such Contributed Entity or any of its Subsidiaries is a party in a manner and amount consistent with past practice (but not liabilities incurred as a result of breaches of any such Contract or violations of applicable Law).
Section 2.8 Affiliate Transactions. Except as set forth on Section 2.8 of the CIM Disclosure Letter or as would otherwise not be required to be disclosed under Item 404 of Regulation S-K promulgated under the Securities Act and the Exchange Act, (a) no Affiliate of the CIM Contributor (other than the Contributed Entities and their respective Subsidiaries) is a party to any Contract, transaction, arrangement or understanding with the Contributed Entities or any of their respective Subsidiaries, other than (i) employment, compensation, benefit or indemnification arrangements entered into in the ordinary course of business, (ii) ordinary course reimbursement of business expenses and (iii) ownership of equity securities of the Contributed Entities and (b) no Affiliate of the CIM Contributor (other than the Contributed Entities and their
-11-
respective Subsidiaries) (i) owns, leases, licenses or otherwise has any interest in any property or asset used by the Contributed Entities or any of their respective Subsidiaries, (ii) is indebted to the Contributed Entities or any of their respective Subsidiaries, or has any claim or right against the Contributed Entities or any of their respective Subsidiaries, other than for compensation or expense reimbursement in the ordinary course of business or as otherwise provided for in any contract, (iii) has any interest in any material customer, supplier, vendor, lessor, lessee, licensor, licensee or competitor of the Contributed Entities or any of their respective Subsidiaries or (iv) provides or receives any material services, products or other benefits to or from the Contributed Entities or any of their respective Subsidiaries.
Section 2.9 Litigation.
(a) As of the Closing Date, there are no Actions pending or threatened in writing against the CIM Contributor, the Contributed Entities or any of their respective Subsidiaries (and no Governmental Entity has indicated an intention to initiate an Action) that would reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole.
(b) As of the Closing Date, none of the CIM Contributor, the Contributed Entities nor any of their respective Subsidiaries is a party to or subject to any Order which would reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole.
Section 2.10 Compliance with Laws. Since December 31, 2023, the businesses of the Contributed Entities and their respective Subsidiaries have not been, and are not being, conducted in violation of any Laws, except for violations that would not, individually or in the aggregate, reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole. The Contributed Entities and their respective Subsidiaries have not received any written communication alleging any noncompliance with any such Laws that has not been cured as of the Closing Date, except as would not, individually or in the aggregate, reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole. Each of the Contributed Entities and their respective Subsidiaries has obtained and is in compliance with all permits, licenses, certifications, approvals, registrations, consents, authorizations, franchises, variances, exemptions and orders issued or granted by a Governmental Entity necessary to conduct its business as presently conducted, except where the absence thereof would not, individually or in the aggregate, reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole.
Section 2.11 Brokers and Finders. No Contributed Entity nor any Subsidiary of any Contributed Entity has engaged any investment banker, broker or finder or incurred or will incur any liability for any brokerage payments, investment banking fees, commissions, finders’ fees or other similar payments in connection with the Transactions.
-12-
Section 2.12 Investor Status. As of the Closing Date and the Earnout Amount Payment Date (if any), the CIM Contributor has had an opportunity to discuss the business, management and financial affairs of New OP and CMFT and the terms and conditions of the New OP Class A LP Units and CMFT Preferred Shares issuable to the CIM Contributor hereunder on such date with management of New OP and CMFT. As of the Closing Date and the Earnout Amount Payment Date (if any), the CIM Contributor is acquiring the New OP Class A LP Units and the CMFT Preferred Shares issuable to the CIM Contributor hereunder on such date for its own account for investment purposes and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act or any applicable state securities Laws. As of the Closing Date and the Earnout Amount Payment Date (if any), the CIM Contributor understands that the New OP Class A LP Units and CMFT Preferred Shares issuable to the CIM Contributor hereunder on such date have not been and will not be (as applicable) registered under the Securities Act or any applicable state securities Laws and are being issued or will be issued (as applicable) in reliance upon an exemption from such registration requirements. As of the Closing Date and the Earnout Amount Payment Date (if any), the CIM Contributor understands that the New OP Class A LP Units and CMFT Preferred Shares issuable to the CIM Contributor hereunder, in each case, on such date constitute “restricted securities” under applicable federal securities Laws and may not be offered, sold, assigned, pledged, transferred or otherwise disposed of except pursuant to an effective registration statement under the Securities Act and applicable state securities Laws or pursuant to an available exemption from, or in a transaction not subject to, such registration requirements. As of the Closing Date and the Earnout Amount Payment Date (if any), the CIM Contributor understands that no public market now exists for the New OP Class A LP Units or the CMFT Preferred Shares issuable to the CIM Contributor hereunder on such date, and that neither New OP nor CMFT has made any assurance that a public market will ever exist for the New OP Class A LP Units or the CMFT Preferred Shares issuable to the CIM Contributor hereunder on such date. As of the Closing Date, as of the Earnout Amount Payment Date (if any), the CIM Contributor is and will be an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act.
Section 2.13 Taxes. Except as would not, individually or in the aggregate, reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole:
(a) Each of the Contributed Entities has duly and timely filed all income and other Tax Returns that it was required to file under applicable Laws, and all such Tax Returns were true, correct and complete. All Taxes due and owing by each of the Contributed Entities (whether or not shown on any Tax Return) have been timely paid in full, except for Taxes that are being contested in good faith by appropriate procedures and for which adequate accruals or reserves have been established in accordance with GAAP.
(b) There are no Liens for Taxes on the Contributed Interests or the assets of the Contributed Entities other than Liens for Taxes not yet delinquent or which are being contested in good faith by appropriate procedures and for which adequate accruals or reserves have been established in accordance with GAAP.
(c) No claim has ever been made by a Tax authority in a jurisdiction where any of the Contributed Entities does not file Tax Returns or pay Taxes that any of the Contributed Entities is or may be subject to taxation by that jurisdiction.
-13-
(d) No Tax audits or administrative or judicial Tax proceedings are pending, being conducted or threatened in writing with regard to any Tax or Tax Returns of the Contributed Entities.
(e) Neither of the Contributed Entities has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.
(f) The Contributed Entities will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting for a Pre-Closing Tax Period, (ii) use of an improper method of accounting for a Pre-Closing Tax Period, (iii) a “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of U.S. state, local or non-U.S. Law) executed on or prior to the Closing Date, (iv) installment sale or open transaction disposition made on or prior to the Closing Date, or (v) prepaid amount or any other income eligible for deferral under the Code or Regulations promulgated thereunder that is received on or prior to the Closing Date.
(g) None of the Contributed Entities, including any of their respective Subsidiaries, has participated in a “listed transaction” as defined in Regulations Section 1.6011-4(b)(2) (or similar provisions of applicable state or local income tax law).
(h) None of the Contributed Entities, including any of their Subsidiaries, is a party to or bound by, or has any obligation under, any tax allocation, indemnity, sharing or protection agreement or similar contract or has any other obligation to indemnify any other Person with respect to Taxes that will be in effect after the Closing (other than any commercial agreement entered into in the ordinary course of business, the principal purposes of which are not related to Taxes).
(i) Neither the CIM Contributor nor any of its Subsidiaries or Affiliates has entered into, amended, accelerated, increased, waived any condition with respect to, or otherwise modified any compensatory or equity-based arrangement, transaction bonus, retention arrangement, management agreement, exchange right, tax receivable agreement, partnership-unit arrangement or other agreement or understanding that, individually or in the aggregate, could reasonably be expected to result in an excess parachute payment within the meaning of Treasury Regulation Section 1.280G-1, Q/A 3, in connection with the issuance of the CMFT Preferred Shares or any of the related Transactions.
Section 2.14 Q2 2026 Distributions. The Contributed Entities have fully paid out any and all dividends and other distributions due to the CIM Contributor for the fiscal quarter ended June 30, 2026 in the amounts, and upon the terms, described in Section 2.14 of the CIM Disclosure Letter. The Contributed Entities have no outstanding liabilities or obligations in respect of the payment of dividends or other distributions to the CIM Contributor.
-14-
Section 2.15 CIM Pre-Closing Actions. Each of the CIM Pre-Closing Actions has been duly authorized, validly taken and consummated prior to the Closing in accordance with, and upon the terms and conditions set forth herein, except as would not reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole. The consummation of the CIM Pre-Closing Actions, and any and all actions taken to approve, authorize or otherwise effectuate the CIM Pre-Closing Actions, complied in all respects with applicable Law and with the Organizational Documents of the CIM Contributor, the Contributed Entities and each of their respective Subsidiaries, except as would not reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole. None of the CIM Contributor, the Contributed Entities, nor any of their respective Subsidiaries has incurred any Lien, commitment, restriction, liability or other obligation in connection with the CIM Pre-Closing Actions, nor will the CIM Pre-Closing Actions result in the imposition of any such Lien, commitment, restriction, liability or other obligation on any Party or any Affiliate thereof following the date of this Agreement, except, in each case, as would not reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole.
Section 2.16 Title to Assets. Each of the Contributed Entities and each of their respective Subsidiaries has good and valid title to (or in the case of any owned real property, good and marketable fee simple title to), or a valid leasehold interest in, all property and assets reflected on the Interim Balance Sheet, other than properties and assets sold or otherwise disposed of in the ordinary course of business consistent with past practice since March 31, 2026 or except as otherwise would not reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole. All such properties and assets (including leasehold interests) are free and clear of Liens except for the following: (a) Liens set forth on Section 2.16 of the CIM Disclosure Letter, (b) Liens for Taxes not yet due and payable or being contested in good faith in the ordinary course of business consistent with past practices, (c) mechanics, carriers’, workmen’s, repairmen’s or other like Liens arising or incurred in the ordinary course of business consistent with past practice or amounts that are not delinquent and which are not material to the Contributed Entities and their respective Subsidiaries, taken as a whole, (d) easements, rights of way, zoning ordinances and other similar Liens affecting real property which are not material to the Contributed Entities and their respective Subsidiaries, taken as a whole or (e) Liens that would not reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole. Except as would not reasonably be expected to be material to the Contributed Entities and their respective Subsidiaries, taken as a whole, such assets are sufficient for the continued conduct of the business of the Contributed Entities and their respective Subsidiaries in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct the business of the Contributed Entities and their respective Subsidiaries taken as a whole as currently conducted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CMFT
Except as set forth in the corresponding sections or subsections of the disclosure letter delivered to the CIM Contributor by CMFT on or prior to the Execution Date (the “CMFT Disclosure Letter”) (it being agreed that disclosure of any item in any section or subsection of the CMFT Disclosure Letter shall also be deemed disclosure with respect to any other section or subsection of this Agreement to which the relevance of such item is reasonably apparent on its face) or in the CMFT SEC Documents (as defined below), CMFT hereby represents and warrants as of the Closing Date (or in the case of representations and warranties that speak of a specified date, as of such specified date) as follows:
-15-
Section 3.1 Organization, Good Standing and Qualification. CMFT, New OP and their respective Subsidiaries each (a) is a legal entity duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization, (b) has all requisite corporate power, limited partnership power or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and (c) is qualified to do business and, to the extent such concept is applicable, is in good standing as a foreign corporation or other legal entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification except where the failure to be so qualified or in good standing as a foreign corporation or other legal entity would not reasonably be expected to be material to CMFT, New OP and their respective subsidiaries taken as a whole.
Section 3.2 Authority; Approval.
(a) Each of CMFT and New OP (collectively, the “CMFT Entities”) has all requisite corporate or similar power and authority necessary to enter into and perform its obligations under this Agreement and each of the other Transaction Documents to which such CMFT Entity is a party and has taken all corporate, limited partnership or other similar action necessary in order to execute, deliver and perform its obligations under this Agreement and each of the other Transaction Documents to which such CMFT Entity is a party. This Agreement has been, and each of the other Transaction Documents to which such CMFT Entity is a party will be at the Closing, duly executed and delivered by such CMFT Entity and, when executed and delivered by the other parties hereto and thereto, will constitute a valid and binding agreement of such CMFT Entity, enforceable against such CMFT Entity in accordance with its terms, subject to the Bankruptcy and Equity Exception.
(b) The CMFT Board has, at a duly convened and held meeting, unanimously approved this Agreement, the other Transaction Documents and the Transactions. No other corporate or other proceedings are necessary to authorize this Agreement, the other Transaction Documents or to consummate the Transactions. No vote of holders of CMFT Common Shares (or any other shares of capital stock, equity interests or other securities of CMFT) is necessary to approve this Agreement or the other Transaction Documents, or to approve, perform or consummate any of the Transactions. The CMFT Board has taken all necessary action required under the Organizational Documents of CMFT to ensure that (i) the CIM Contributor will not be prohibited from entering into or consummating the Transactions and (ii) the CIM Contributor and all other equity holders in CMFT will, at and following the Closing, not be subject to any restriction or limitation on the ownership or transfer of any capital stock of CMFT under the Charter, including without limitation on any capital stock of CMFT to be delivered at Closing in accordance herewith or which may in the future be delivered or deliverable upon tender and redemption of New OP Class A LP Units and any securities issued or issuable in respect thereof.
Section 3.3 Ownership of Interests; Capitalization.
(a) (i) As of immediately prior to the execution and delivery of this Agreement and continuing until the acceptance for record of the CMFT Articles of Amendment and CMFT Articles Supplementary by the Department, the authorized capital stock of CMFT consists of 490,000,000 shares of common stock, par value $0.01 per share (of which 436,884,776.208 shares are issued and outstanding), and 10,000,000 shares of preferred stock, par
-16-
value $0.01 per share (of which no shares are issued and outstanding) and (ii) Section 3.3(a)(ii) of the CMFT Disclosure Letter sets forth a true, correct and complete listing of all authorized, issued and outstanding equity interests of New OP and Existing OP, together with all holders thereof as of immediately prior to the Closing. All such equity interests, together with the equity interests of the CMFT Entities’ respective Subsidiaries, have been duly authorized and are validly issued, fully paid and nonassessable. As of immediately prior to the Closing, except as set forth in the first sentence of this Section 3.3(a), there are no issued and outstanding equity interests of any CMFT Entity.
(b) (i) As of immediately prior to the Closing but after the acceptance for record of the CMFT Articles of Amendment and CMFT Articles Supplementary by the Department, the authorized capital stock of CMFT will consist of 2,000,000,000 shares of common stock, par value $0.01 per share (of which 436,884,776.208 shares will be issued and outstanding), and 1,100,000,000 shares of preferred stock, par value $0.01 per share, of which 1,000,000,000 are classified and designated as CMFT Preferred Shares, (ii) as of immediately following the Closing, 907,376,073.663 CMFT Preferred Shares will be issued and outstanding, none of which will be subject to the restriction on ownership or transfer set forth on Article VI of the Charter and (iii) Section 3.3(b)(iii) of the CMFT Disclosure Letter sets forth a true, correct and complete listing of all authorized, issued and outstanding equity interests of New OP and Existing OP, together with all holders thereof as of immediately following the Closing. As of immediately following the Closing, all such equity interests, together with the equity interests of the CMFT Entities’ respective Subsidiaries, will be duly authorized and validly issued, fully paid and nonassessable. As of immediately following the Closing, except as set forth in the first sentence of this Section 3.3(b), there are no issued and outstanding equity interests of any CMFT Entity.
(c) Except as set forth in Section 3.3(c) of the CMFT Disclosure Letter, as of immediately prior to the Closing through the consummation of the Closing, each outstanding equity interest of each Subsidiary of CMFT is and will be held, directly or indirectly, by CMFT. None of CMFT, New OP nor any of their respective Subsidiaries has any outstanding bonds, debentures, notes or other obligations, the holders of which have the right to vote (or convert into or exercise for securities having the right to vote) with its equityholders on any matter. Except for this Agreement and the Organizational Documents of such entity, none of CMFT, New OP nor any of their respective Subsidiaries is party to any voting trust agreements, proxies or other Contracts with respect to the voting, purchase, repurchase, dividend rights, disposition or transfer of any of its equity interests. Except to the extent set forth in this Agreement and the New OP Limited Partnership Agreement, there are no preemptive or other outstanding rights, options, warrants, agreements, arrangements or commitments of any character under which CMFT, New OP or any of their respective Subsidiaries is or may become obligated to sell, or giving any Person a right to acquire or in any way dispose of, any equity interests in CMFT, New OP or any of their respective Subsidiaries or any securities or obligations exercisable or exchangeable for, or convertible into, any securities of CMFT, New OP or any of their respective Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding.
-17-
Section 3.4 Governmental Filings; No Violations.
(a) Other than (i) the expirations of waiting periods and the filings, notices, reports, consents, registrations, approvals, permits and authorizations under the HSR Act and FINRA Rule 1017 and (ii) filing of the CMFT Articles of Amendment and CMFT Articles Supplementary with, and acceptance for record of the CMFT Articles of Amendment and CMFT Articles Supplementary by, the Department, no notices, reports or other filings are required to be made by CMFT, New OP or any of their respective Subsidiaries with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by CMFT, New OP or any of their respective Subsidiaries from, any Governmental Entity in connection with the execution, delivery and performance of this Agreement and the other Transaction Documents by the applicable CMFT Entities and the consummation of the Transactions, except those that the failure to make or obtain would not reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole.
(b) The execution, delivery and performance by the applicable CMFT Entities of this Agreement and the other Transaction Documents to which such CMFT Entities are parties do not, and the consummation of the Transactions will not, conflict with, or result in any breach or violation of or default (with or without notice, lapse of time, or both) under, or give rise to any right of termination, loss of rights, adverse modification of provisions, cancellation or acceleration of any obligations under, or result in the creation of a Lien on any of the assets of CMFT, New OP or any of their respective Subsidiaries under, any provision of (i) the Organizational Documents of CMFT, New OP or any of their respective Subsidiaries, (ii) other than as set forth in Section 3.4(b) of the CMFT Disclosure Letter, any Contract binding upon CMFT, New OP or any of their respective Subsidiaries or (iii) assuming (solely with respect to performance of this Agreement and the other Transaction Documents and consummation of the Transactions) compliance with the matters referred to in Section 3.4(a), any Law to which CMFT, New OP or any of their respective Subsidiaries is subject except, in the case of clauses (ii) and (iii) above, for any such breach, violation, default, termination, loss, adverse modification, cancellation, acceleration or creation that would not reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole.
Section 3.5 SEC Filings
(a) CMFT has timely filed with or furnished to the SEC all reports, schedules, forms, statements, prospectuses, registration statements and other documents required to be filed with or furnished to the SEC by CMFT since December 31, 2023 (collectively, together with any exhibits and schedules thereto and other information incorporated therein, the “CMFT SEC Documents”).
(b) Except as set forth in Section 3.5(b) of the CMFT Disclosure Letter, no Subsidiary of CMFT is required to file or furnish any report, schedule, form, statement, prospectus, registration statement or other document with the SEC.
(c) As of its filing date (or, if amended or superseded by a filing prior to the date of this Agreement, as of the date of such amended or superseding filing), the CMFT SEC Documents filed or furnished prior to the date of this Agreement complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, as the case may be.
-18-
(d) As of its filing date (or, if amended or superseded by a filing prior to the date of this Agreement, as of the date of such amended or superseding filing), each CMFT SEC Document filed or furnished prior to the date of this Agreement did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
(e) Each CMFT SEC Document that is a registration statement, as amended or supplemented, if applicable, filed pursuant to the Securities Act, as of the date such registration statement or amendment became effective, and as of the date of such amendment or supplement, did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in any material respect.
(f) As of the date of this Agreement, there are no outstanding or unresolved comments received from the SEC staff with respect to any of the CMFT SEC Documents, and, to the knowledge of CMFT, none of the CMFT SEC Documents are subject to ongoing SEC review.
Section 3.6 Financial Statements
(a) The audited consolidated financial statements and unaudited consolidated interim financial statements of CMFT included or incorporated by reference in the CMFT SEC Documents (or, if any such CMFT SEC Document is amended or superseded by a filing prior to the date of this Agreement, such amended or superseding CMFT SEC Document) (collectively, the “CMFT Financial Statements”) (including the related notes and schedules thereto) fairly present in all material respects the consolidated financial position of CMFT and its consolidated Subsidiaries as of the date or period set forth therein and the consolidated balance sheets, consolidated statements of income (loss), consolidated statements of stockholders’ equity (deficit) and consolidated statements of cash flows included in the CMFT Financial Statements (including any related notes and schedules thereto) fairly present in all material respects the financial condition, results of operations, changes in stockholders’ equity and cash flows of CMFT and its consolidated Subsidiaries for the periods set forth therein (subject, in the case of unaudited consolidated interim financial statements of CMFT, to normal year-end audit adjustments that are not material in amount or effect), in each case in accordance with GAAP, consistently applied during the periods involved (except, in the case of unaudited consolidated interim financial statements, as permitted by Form 10-Q of the SEC).
(b) CMFT maintains a system of internal accounting controls sufficient, in all material respects, to provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, except as would not reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole.
-19-
(c) CMFT has disclosed, based on its most recent evaluation of its internal accounting controls by its chief executive officer and its chief financial officer prior to the Closing Date, to CMFT’s auditors and audit committee (i) any significant deficiencies and material weaknesses in the design or operation of internal controls that would be reasonably expected to adversely affect CMFT’s ability to record, process, summarize and report financial information for inclusion in the CMFT Financial Statements and (ii) any fraud, whether or not material, that involves any current or former employees who have (or had at the time of such filing) a significant role in CMFT’s internal controls over financial reporting. Since December 31, 2023, no material complaints from any source regarding accounting, internal accounting controls or auditing matters have been received by CMFT, except as would not reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole.
Section 3.7 Absence of Certain Changes. Since December 31, 2025, CMFT, New OP and their respective Subsidiaries have conducted their respective businesses in the ordinary course of such businesses, consistent with past practices in all material respects (other than in connection with the CMFT Pre-Closing Actions or the Transactions), except as would not reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole.
Section 3.8 No Undisclosed Liabilities. None of CMFT, New OP nor any of their respective Subsidiaries has any material obligations or liabilities (whether accrued, absolute, contingent, unknown or otherwise) required under GAAP to be reflected or reserved against in CMFT’s consolidated balance sheet that would reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole, other than liabilities that (a) have been adequately reserved against or reflected in the CMFT Financial Statements, (b) were incurred since December 31, 2025 in the ordinary course of business consistent with past practice, (c) have been incurred pursuant to the Transaction Documents or in connection with the Transactions or (d) have been incurred in the performance of obligations under Contracts to which CMFT or any of its Subsidiaries is a party (but not liabilities incurred as a result of breaches of any such Contract). Since the date of its formation, New OP has not engaged in any activities or incurred any expenses, fees, liabilities, or other obligations (whether accrued, absolute, contingent, unknown or otherwise), other than as expressly contemplated by the CMFT Pre-Closing Actions or the other Transaction Documents.
Section 3.9 Affiliate Transactions. Except for (a) the Management Agreement, (b) as otherwise set forth on Section 3.9 of the CMFT Disclosure Letter or (c) as would not reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole, no Affiliate of CMFT (other than CMFT, New OP and their respective Subsidiaries) (i) is a party to any Contract, transaction, arrangement or understanding with CMFT, New OP or any of their respective Subsidiaries, (ii) owns, leases, licenses or otherwise has any interest in any property or asset used by CMFT, New OP or any of their respective Subsidiaries, (iii) is indebted to CMFT or any of its Subsidiaries, or has any claim or right against CMFT, New OP or any of their respective Subsidiaries, other than for compensation or expense reimbursement in the ordinary course of business, (iv) has any interest in any material customer, supplier, vendor, lessor, lessee, licensor, licensee or competitor of CMFT, New OP or any of their respective Subsidiaries or (v) provides or receives any material services, products or other benefits to or from CMFT, New OP or any of their respective Subsidiaries.
-20-
Section 3.10 Litigation.
(a) As of the Closing Date, there are no Actions pending or threatened in writing against CMFT, New OP or any of their respective Subsidiaries (and no Governmental Entity has indicated an intention to initiate an Action) that would reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole.
(b) As of the Closing Date, none of CMFT, New OP nor any of their respective Subsidiaries is a party to or subject to any Order which would reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole.
Section 3.11 Compliance with Laws. Since December 31, 2023, the businesses of each of CMFT, New OP and their respective Subsidiaries have not been, and are not being, conducted in violation of any Laws, except for violations that would not, individually or in the aggregate, reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole. CMFT, New OP and their respective Subsidiaries have not received any written communication alleging any noncompliance with any such Laws that has not been cured as of the Closing Date, except as would not, individually or in the aggregate, reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole. Each of CMFT and its Subsidiaries has obtained and is in compliance with all permits, licenses, certifications, approvals, registrations, consents, authorizations, franchises, variances, exemptions and orders issued or granted by a Governmental Entity necessary to conduct its business as presently conducted, except those the absence of which would not, individually or in the aggregate, reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole.
Section 3.12 Brokers and Finders. Except as set forth on Section 3.12 of the CMFT Disclosure Letter, none of CMFT, New OP nor any of their respective Subsidiaries has engaged any investment banker, broker or finder or incurred or will incur any liability for any brokerage payments, investment banking fees, commissions, finders’ fees or other similar payments in connection with the Transactions.
Section 3.13 Exemption of New OP Class A LP Units and CMFT Preferred Shares.
(a) No General Solicitation. As of the Closing Date and the Earnout Amount Payment Date (if any), none of CMFT, New OP nor any Person acting on behalf of CMFT or New OP has offered or sold any CMFT Preferred Shares or New OP Class A LP Units by any form of general solicitation or general advertising (within the meaning of Regulation D of the Securities Act). As of the Closing Date and the Earnout Amount Payment Date (if any), CMFT and New OP have only offered CMFT Preferred Shares and New OP Class A LP Units for issuance to the CIM Contributor. Assuming the accuracy of the representations and warranties of the CIM Contributor set forth in Section 2.12, as of the Closing Date and the Earnout Amount Payment Date (if any), none of CMFT, New OP nor any of their respective Affiliates nor any other Person acting on their behalf has, directly or indirectly, (i) made any offers or sales of any CMFT Preferred Shares or New OP Class A LP Units or (ii) solicited any offers to buy any CMFT Preferred Shares or New OP Class A LP Units, in each case, under circumstances that would adversely affect any reliance by CMFT or New OP on Section 4(a)(2) of the Securities Act or Rule 506(b) of Regulation D promulgated thereunder for an exemption from registration for the transactions contemplated hereby.
-21-
(b) No Disqualification Events. As of the Closing Date and the Earnout Amount Payment Date (if any), none of CMFT, New OP nor, after reasonable inquiry, any other Person covered by Rule 506(d) of Regulation D under the Securities Act with respect to the issuance of the CMFT Preferred Shares or the New OP Class A LP Units is subject to any disqualification event described in Rule 506(d)(1) of Regulation D under the Securities Act, except for any event covered by Rule 506(d)(2) or Rule 506(d)(3) of Regulation D under the Securities Act or disclosed in accordance with Rule 506(e) of Regulation D under the Securities Act.
Section 3.14 Taxes. Except as would not, individually or in the aggregate, reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole:
(a) Each CMFT Company Group Member has duly and timely filed all income and other Tax Returns that it was required to file under applicable Laws, and all such Tax Returns were true, correct and complete. All Taxes due and owing by each CMFT Company Group Member (whether or not shown on any Tax Return) have been timely paid in full, except for Taxes that are being contested in good faith by appropriate procedures and for which adequate accruals or reserves have been established in accordance with GAAP.
(b) There are no Liens for Taxes on the Equity Interests of any CMFT Company Group Members or the assets of the CMFT Company Group Members other than Liens for Taxes not yet delinquent or which are being contested in good faith by appropriate procedures and for which adequate accruals or reserves have been established in accordance with GAAP.
(c) No claim has ever been made by a Tax authority in a jurisdiction where a CMFT Company Group Member does not file Tax Returns or pay Taxes that such CMFT Company Group Member is or may be subject to taxation by that jurisdiction.
(d) No Tax audits or administrative or judicial Tax proceedings are pending, being conducted or threatened in writing with regard to any Tax or Tax Returns of any CMFT Company Group Member.
(e) No CMFT Company Group Member has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.
(f) No CMFT Company Group Member will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting for a Pre-Closing Tax Period, (ii) use of an improper method of accounting for a Pre-Closing Tax Period, (iii) a “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of U.S. state, local or non-U.S. Law) executed on or prior to the Closing Date, (iv) installment sale or open transaction disposition made on or prior to the Closing Date or (v) prepaid amount or any other income eligible for deferral under the Code or Regulations promulgated thereunder that is received on or prior to the Closing Date.
-22-
(g) No CMFT Company Group Member has distributed Equity Interests of another Person, or had its Equity Interests distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Sections 355 or 361 of the Code within two years of the date hereof.
(h) No CMFT Company Group Member has participated in a “listed transaction” as defined in Regulations Section 1.6011-4(b)(2) (or similar provisions of applicable state or local income tax law).
(i) No CMFT Company Group Member is a party to or bound by, or has any obligation under, any tax allocation, indemnity, sharing or protection agreement or similar contract or has any other obligation to indemnify any other Person with respect to Taxes that will be in effect after the Closing (other than any commercial agreement entered into in the ordinary course of business, the principal purposes of which are not related to Taxes).
(j) For each of its taxable years commencing with its taxable year ended December 31, 2012 and ending with the taxable year ended on December 31, 2025 (each such taxable year, a “REIT Year”), CMFT has been organized and has operated in conformity with the requirements for qualification and taxation as a real estate investment trust (a “REIT”) within the meaning of Section 856 of the Code.
(k) Prior to the Closing Date, no CMFT Company Group Member has taken or failed to take any action which action or failure to act could reasonably be expected to result in the failure of CMFT to qualify as a REIT for any REIT Year.
(l) There are no Actions pending or threatened in writing against CMFT (and no Governmental Entity has indicated an intention to initiate an Action) that would reasonably be expected to challenge the status or qualification of CMFT as a REIT for any REIT Year.
(m) Neither the issuance of the CMFT Preferred Shares nor any of the Transactions will result in any individual who is, or who could reasonably be expected to be, a “disqualified individual” within the meaning of Regulations Section 1.280G-1, Q/A-15, with respect to CMFT, New OP, Existing OP, or any corporation, partnership or other entity that is treated as affiliated therewith for purposes of Section 280G of the Code, receiving any payment or benefit that would constitute an “excess parachute payment” within the meaning of Section 280G(b) of the Code. Without limiting the foregoing, no CMFT Company Group Member has entered into, amended, accelerated, increased, waived any condition with respect to, or otherwise modified any compensatory or equity-based arrangement, transaction bonus, retention arrangement, management agreement, exchange right, tax receivable agreement, partnership-unit arrangement or other agreement or understanding that, individually or in the aggregate, could reasonably be expected to result in an excess parachute payment in connection with the issuance of the CMFT Preferred Shares or any of the related Transactions.
-23-
Section 3.15 CMFT Pre-Closing Actions. Each of the CMFT Pre-Closing Actions has been duly authorized, validly taken and fully consummated prior to the Closing in accordance with, and upon the terms and conditions set forth in, Exhibit H hereto, except as would not reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole. The consummation of the CMFT Pre-Closing Actions, and any and all actions taken to approve, authorize or otherwise effectuate the CMFT Pre-Closing Actions, complied in all respects with applicable Law and with the Organizational Documents of CMFT, New OP and each of their respective Subsidiaries, except as would not reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole. Except as expressly described in Exhibit H hereto, none of CMFT, New OP nor any of their respective Subsidiaries incurred any Lien, commitment, restriction, liability or other obligation in connection with the CMFT Pre-Closing Actions, nor will the CMFT Pre-Closing Actions result in the imposition of any such Lien, commitment, restriction, liability or other obligation on any Party or any Affiliate thereof following the date of this Agreement, except as would not reasonably be expected to be material to CMFT, New OP and their respective Subsidiaries, taken as a whole. CMFT has made available to the CIM Contributor true, complete and correct copies of all documents, instruments, agreements, consents, approvals, resolutions, certificates, filings and other materials evidencing or relating to the authorization, approval and completion of the CMFT Pre-Closing Actions.
ARTICLE IV
POST-CLOSING COVENANTS
Section 4.1 Confidentiality. The terms of the confidentiality agreement, dated as of April 30, 2026 (the “Confidentiality Agreement”), by and among CMFT and CIM Group Parent, are hereby incorporated by reference, mutatis mutandis, and shall continue in full force and effect upon the terms and conditions set forth therein. Notwithstanding the termination of the Confidentiality Agreement upon its terms, the Parties shall, and shall cause their Affiliates and respective Representatives to, keep confidential any information concerning, in the case of the CIM Contributor, any information about CMFT, New OP, and their respective Affiliates (other than the CIM Contributor, its parent entities, and any of their respective Subsidiaries) furnished by or on behalf of CMFT in connection with the Transactions and, in the case of CMFT and New OP, any information concerning the CIM Contributor or any of their Affiliates (other than CMFT, New OP and any of their respective Subsidiaries) furnished by or on behalf of the CIM Contributor in connection with the Transactions; provided, however, that notwithstanding the foregoing, the Parties may share any information (a) that was, is or becomes generally available to the public other than as a result of a disclosure by any Party in breach of this Section 4.1, (b) that was within the possession of any Party or any of its Representatives, free of any obligation of confidentiality, prior to being furnished to such Party or any of its Representatives under this Agreement, (c) that is lawfully obtained by a Party or any of its Representatives from another source that, as far as such Party is aware, is not, by virtue of such disclosure, in breach of any obligation of confidentiality of such source with respect to such information, (d) that is independently developed by a Party or its Representatives without use of, or reference to, any information that such Party would be obligated to keep confidential under the provisions of this Section 4.1, or (e) disclosure of which information (i) is required by applicable Law, applicable stock exchange rules, or any listing agreement, (ii) is consistent with (and not materially expansive of) prior public communications previously consented to by the other Parties or otherwise included in the public filings or disclosures of the other Parties that were otherwise made in compliance with this Section 4.1, or (iii) relates to any dispute or actual or threatened Actions between or among the Parties or their respective Affiliates related to this Agreement, the other Transaction Documents or any of the Transactions.
-24-
Section 4.2 Publicity. The initial press release concerning this Agreement and the Transactions shall be a joint press release in the form mutually agreed by CMFT and the CIM Contributor prior to the execution of this Agreement.
Section 4.3 Release.
(a) CIM Release. Effective as of the Closing, the CIM Contributor, on behalf of itself and its heirs, successors, permitted assigns, representatives, administrators, executors, beneficiaries, agents, and each of their Subsidiaries and Affiliates (excluding, for the avoidance of doubt, CMFT, New OP, and their respective Subsidiaries, such as the Contributed Entities and their Subsidiaries from and after the Closing) (each, a “CIM Related Person”), hereby absolutely, unconditionally and irrevocably releases and discharges, fully, finally and forever, CMFT and New OP (together, the “CMFT Released Parties”) from any and all rights, claims and Losses of any type that it or any of its CIM Related Persons has had, now has or might now or hereafter have against the CMFT Released Parties, and each of their respective individual, joint or mutual, past, present and future representatives, Affiliates, stockholders, Subsidiaries (including the Contributed Entities and their Subsidiaries from and after the Closing), successors and assigns (each, together with the CMFT Released Parties, a “CMFT Releasee”) in respect of, relating to or arising in connection with the Transactions contemporaneously with or prior to the Closing Date, except for (i) any rights or claims pursuant to the express provisions of the Transaction Documents or the Management Agreement and (ii) any rights under indemnification provisions of the Organizational Documents of CMFT, New OP, the Contributed Entities or their respective Subsidiaries, and rights under any employment, stock option, bonus or other employment or compensation agreements or plans. The CIM Contributor, for itself and its CIM Related Persons (i) acknowledges that it is aware that it or such CIM Related Person may hereafter discover facts different from or in addition to the facts which it or such CIM Related Person now knows or believes to be true with respect to the subject matter of this Agreement, but that it or such CIM Related Person intends that the general releases herein given shall be and remain in full force and effect, notwithstanding the discovery of any such different or additional facts and (ii) acknowledges that it has been informed of, and that it or such CIM Related Person is familiar with, Section 1542 of the Civil Code of the State of California, which provides as follows: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.” The CIM Contributor, for itself and its CIM Related Persons, hereby waives and relinquishes (x) all rights and benefits such Person has or may have under Section 1542 of the Civil Code of the State of California, to the full extent that such Person may lawfully waive all such rights and benefits pertaining to the subject matters of this Agreement and (y) any similar or comparable protections afforded by any case law or statutes of similar import, whether such laws are in the United States or elsewhere in the world. The CIM Contributor, for itself and its CIM Related Persons, hereby irrevocably covenants to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced or voluntarily aiding, any proceeding of any kind against any CMFT Releasee, based upon any matter purported to be
-25-
released hereby, including any Actions, executions, judgments, duties, debts, dues, accounts, bonds, Contracts and covenants (whether express or implied), and claims and demands whatsoever whether in law or in equity (whether based upon contract, tort or otherwise) which it or such CIM Related Person may have against each of the applicable CMFT Releasees, now or in the future, in each case in respect of any cause, matter or thing relating to the Transactions or any actions taken or failed to be taken by any of the applicable CMFT Releasees in any capacity related to the Transactions occurring or arising prior to the Closing Date.
(b) CMFT Release. Effective as of the Closing, each of CMFT and New OP, on behalf of itself and its heirs, successors, permitted assigns, representatives, administrators, executors, beneficiaries, agents, and each of their Subsidiaries and Affiliates (for the avoidance of doubt, excluding the CIM Contributor, the CIM Contributor’s parent entities and all of their respective Subsidiaries, but including the Contributed Entities and their respective Subsidiaries) (each, a “CMFT Related Person”), hereby absolutely, unconditionally and irrevocably releases and discharges, fully, finally and forever, the CIM Contributor from any and all rights, claims and Losses of any type that it or any of its CMFT Related Persons has had, now has or might now or hereafter have against the CIM Contributor, and each of their respective individual, joint or mutual, past, present and future representatives, Affiliates, stockholders, Subsidiaries, successors and assigns (each, together with the CIM Contributor, a “CIM Releasee”) in respect of, relating to or arising in connection with the Transactions contemporaneously with or prior to the Closing Date, except for (i) any rights or claims pursuant to the express provisions of the Transaction Documents or the Management Agreement and (ii) any rights under indemnification provisions of the Organizational Documents of CMFT, New OP, the Contributed Entities or their respective Subsidiaries, and rights under any employment, stock option, bonus or other employment or compensation agreements or plans. Each of CMFT and New OP, for itself and its CMFT Related Persons (i) acknowledges that it is aware that it or such CMFT Related Person may hereafter discover facts different from or in addition to the facts which it or such CMFT Related Person now knows or believes to be true with respect to the subject matter of this Agreement, but that it or such CMFT Related Person intends that the general releases herein given shall be and remain in full force and effect, notwithstanding the discovery of any such different or additional facts and (ii) acknowledges that it has been informed of, and that it or such CMFT Related Person is familiar with, Section 1542 of the Civil Code of the State of California, which provides as follows: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.” Each of CMFT and New OP, for itself and its CMFT Related Persons, hereby waives and relinquishes (x) all rights and benefits such Person has or may have under Section 1542 of the Civil Code of the State of California, to the full extent that such Person may lawfully waive all such rights and benefits pertaining to the subject matters of this Agreement and (y) any similar or comparable protections afforded by any case law or statutes of similar import, whether such laws are in the United States or elsewhere in the world. Each of CMFT and New OP, for itself and its CMFT Related Persons, hereby irrevocably covenants to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced or voluntarily aiding, any proceeding of any kind against any CIM Releasee, based upon any matter purported to be released hereby, including any Actions, executions, judgments, duties, debts, dues, accounts, bonds, Contracts and covenants (whether
-26-
express or implied), and claims and demands whatsoever whether in law or in equity (whether based upon contract, tort or otherwise) which it or such CMFT Related Person may have against each of the applicable CIM Releasees, now or in the future, in each case in respect of any cause, matter or thing relating to the Transactions or any actions taken or failed to be taken by any of the applicable CIM Releasees in any capacity related to the Transactions occurring or arising prior to the Closing Date.
(c) Release Acknowledgment. The Parties acknowledge that this Section 4.3 is not an admission of liability or of the accuracy of any alleged fact or claim. The Parties expressly agree that this Section 4.3 shall not be construed as an admission in any proceeding as evidence of or an admission by any Party of any violation or wrongdoing.
Section 4.4 Tax Matters.
(a) New OP hereby agrees to pay one hundred percent (100%) of all transfer, documentary, sales, use, stamp, recording, value added, registration and other similar Taxes and all conveyance fees, recording fees and other similar charges (all including penalties, interest and other charges with respect thereto, collectively, “Transfer Taxes”) incurred in connection with the consummation of the Transactions.
(b) For U.S. federal (and applicable state and local) income tax purposes, the Parties agree that (i) the Transactions shall be treated as contributions, governed by Section 721(a) of the Code and analogous provisions of state and local income tax laws, (ii) the contributions of the Contributed Interests by the CIM Contributor to New OP shall be treated as a contribution of the assets of CIM Group Management and CIM Group Investments, respectively, in exchange for partnership interests in New OP, (iii) issuance of New OP Class A LP Units to the CIM Contributor pursuant to Section 1.2(a)(ii) and Section 1.5 shall be treated as additional consideration paid by New OP to the CIM Contributor in exchange for the contribution of the Contributed Interests, (iv) the issuance of CMFT Preferred Shares to the CIM Contributor pursuant to Section 1.2(b), Section 1.2(c) and Section 1.5 shall be treated as additional consideration in exchange for the Cash Consideration and (v) the contribution of Existing OP by CMFT to New OP, as part of the CMFT Pre-Closing Actions, shall be treated as a contribution of the assets of Existing OP in exchange for partnership interests in New OP. The Parties shall, and shall cause their Affiliates to, prepare and file all income Tax Returns in a manner consistent with the foregoing tax treatment unless otherwise required by a contrary final “determination” within the meaning of Section 1313(a) of the Code (or under analogous provisions of state and local income tax law).
(c) Upon any issuance of any New OP Class A LP Units and CMFT Preferred Shares to the CIM Contributor pursuant to Section 1.2(a)(i), Section 1.2(a)(ii) and Section 1.5, New OP shall increase the Agreed Value (as such term is defined in the New OP Limited Partnership Agreement) of the Contributed Interests that the CIM Contributor transferred to New OP at the Closing in an amount equal to the fair market value of the New OP Class A LP Units so issued to the CIM Contributor and the capital accounts of all holders of New OP Class A LP Units and New OP Class B LP Units shall be adjusted pursuant to Section 1.704-1(b)(2)(iv)(f). For U.S. federal (and applicable state and local) income Tax purposes, this Section 4.4(c) will be considered a modification of the New OP Limited Partnership Agreement as described in Section 761(c) of the Code and sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Regulations promulgated thereunder.
-27-
Section 4.5 Exchange Listing.
(a) CMFT shall use commercially reasonable efforts to initiate the process of listing its common stock on a national securities exchange registered under Section 6 of the Exchange Act (the “Listing”) within twenty-four (24) months following the Closing Date and consummate the Listing within five (5) years following the Closing Date, including by preparing and submitting all applications, filings, and supporting documentation reasonably required under applicable Law or requested by the SEC, responding promptly to comments from the applicable securities exchange and listing authorities and the SEC, and taking all other actions customarily undertaken by issuers seeking an initial listing on a national securities exchange.
(b) In connection with the Listing, CMFT shall enter into lock-up agreements that are reasonably and customarily required by the applicable exchange, any underwriters, or placement agents in connection with such Listing. The CIM Contributor shall, and CMFT shall use commercially reasonable efforts to cause its Affiliates and its and their respective officers, directors, employees, and other holders of equity securities of CMFT to, enter into such lock-up agreements on terms consistent with those applicable to CMFT, in each case to the extent reasonably and customarily required in connection with the Listing.
Section 4.6 Additional Capital Investment.
(a) From and after the Closing until the consummation of the Listing, CMFT shall use commercially reasonable efforts to identify, solicit, negotiate and consummate an additional capital investment, upon terms acceptable to (i) CMFT and (ii) if such investment is made (or is contemplated to be made) prior to the Consent Rights Expiration Time, the CIM Contributor, in CMFT and/or New OP and/or one or more of their respective Subsidiaries from one or more bona fide third-party investors willing to permit at least fifty percent (50%) of the cash proceeds of such investment (net only of reasonable and customary transaction expenses, fees, and commissions directly attributable to such investment) to be reserved and applied solely for the purpose of redeeming or repurchasing CMFT Common Shares held by stockholders of CMFT who are not Affiliates of the CIM Contributor or CMFT (any such investment, a “Third Party Investment”). Such efforts to effect a Third Party Investment may include engaging financial advisors or placement agents as appropriate, preparing and furnishing customary marketing and diligence materials, participating in management presentations and investor meetings, and negotiating definitive documentation in good faith.
(b) Prior to the Consent Rights Expiration Time, CMFT shall keep the CIM Contributor reasonably informed of the status of its efforts to obtain the Third Party Investment, including material developments in discussions or negotiations with prospective investors, subject to customary confidentiality restrictions.
-28-
Section 4.7 Alternative Recapitalization Transaction.
(a) If the Listing has not occurred on or prior to the fifth (5th) anniversary of the Closing Date (the “Listing Outside Date”), then, promptly following such date, CMFT shall take affirmative steps to evaluate, explore, and pursue in good faith a recapitalization of CMFT upon terms acceptable to (i) CMFT and (ii) if such recapitalization occurs (or is contemplated to occur) prior to the Consent Rights Expiration Time, the CIM Contributor, with the objective of providing liquidity to stockholders of CMFT (the “Recapitalization”). Such efforts shall include, as applicable and upon terms acceptable to CMFT (and, if the Recapitalization occurs (or is contemplated to occur) prior to the Consent Rights Expiration Time, the CIM Contributor), engaging financial advisors, conducting a review of strategic alternatives, preparing marketing and diligence materials, soliciting indications of interest from potential investors or financing sources, and negotiating the terms of a potential Recapitalization in good faith.
(b) CMFT shall use commercially reasonable efforts to consummate the Recapitalization as promptly as reasonably practicable following the Listing Outside Date. Prior to the Consent Rights Expiration Time, CMFT shall keep the CIM Contributor reasonably informed regarding the status of such efforts.
(c) If, at any time following the Listing Outside Date, the CIM Contributor determines that the Recapitalization is not reasonably likely to be consummated within one (1) year following the Listing Outside Date, the CIM Contributor may deliver written notice to CMFT of such determination (the “Recapitalization Determination Notice”). Upon receipt of a Recapitalization Determination Notice, CMFT shall promptly, and in any event within 45 days, commence and thereafter use commercially reasonable efforts to explore and pursue one or more alternative strategic transactions upon terms acceptable to (i) CMFT and (ii) if such alternative transaction occurs (or is contemplated to occur) prior to the Consent Rights Expiration Time, the CIM Contributor, with a view to providing liquidity to the existing stockholders of CMFT (each, a “Strategic Transaction”). A Strategic Transaction may include a sale of CMFT (whether by merger, consolidation, sale of equity, sale of assets, or otherwise), a business combination, or other liquidity event. In connection therewith, CMFT shall, upon terms acceptable to (i) CMFT and (ii) if such alternative transaction occurs (or is contemplated to occur) prior to the Consent Rights Expiration Time, the CIM Contributor, (x) engage financial advisors as appropriate, (y) solicit, evaluate, and negotiate proposals from third parties and (z) take all other actions customarily undertaken by similarly situated companies pursuing comparable strategic alternatives or as otherwise required by applicable Law.
Section 4.8 Alternative Opportunities.
(a) The CIM Contributor agrees that, prior to any of the CIM Principals, directly or indirectly through an entity that such CIM Principal controls, acquiring or otherwise participating in any Alternative Opportunity, the CIM Contributor shall provide written notice to CMFT describing such Alternative Opportunity (an “Opportunity Notice”).
(b) Upon receipt of an Opportunity Notice, CMFT, acting through the CMFT Board (including any applicable committee of the CMFT Board), shall have the right to elect to pursue such Alternative Opportunity. CMFT shall notify the CIM Contributor in writing of its election to pursue or decline such Alternative Opportunity within ten (10) Business Days following receipt of the Opportunity Notice. Failure by CMFT to deliver such written notice within such ten (10) Business Day period shall be deemed an irrevocable waiver by CMFT of its right to pursue such Alternative Opportunity.
-29-
(c) If CMFT elects not to pursue, or is deemed to have waived its right to pursue, an Alternative Opportunity in accordance with this Section 4.8, the CIM Principals shall be permitted, without any further obligation to CMFT, to acquire, invest in, or otherwise participate in such Alternative Opportunity on such terms as they may determine in their sole discretion.
(d) For the avoidance of doubt, (i) none of the CIM Contributor, the CIM Principals or any of their respective Affiliates shall have any obligation to present any investment opportunity to CMFT except as expressly set forth in this Section 4.8, and (ii) neither CMFT nor any of its Affiliates shall have any right, title or interest in or to any Alternative Opportunity unless CMFT has affirmatively elected to pursue such Alternative Opportunity in accordance with this Section 4.8.
Section 4.9 CMFT Dividends; New OP Earnout Special Distributions; Minimum Guaranteed New OP Distributions.
(a) Subject in all respects to applicable Law, CMFT shall pay out, on July 1, 2026 or as promptly as practicable thereafter consistent with CMFT’s ordinary course dividend payment practices, any unpaid dividends and other distributions that CMFT has declared prior to the date of this Agreement to be paid out through June 30, 2026 (together with any accrued interest and other fees), with such amounts to be solely paid out of the cash balances of CMFT and its Subsidiaries prior to the Closing.
(b) Notwithstanding anything to the contrary herein or in the other Transaction Documents, on the Earnout Amount Payment Date (if any), New OP shall, and CMFT shall cause New OP to, make a special cash distribution to the CIM Contributor (and no other partner of New OP) in an amount equal to the aggregate distributions the CIM Contributor would have received in respect of the New OP Class A LP Units issuable to the CIM Contributor as part of the Earnout Amount had the CIM Contributor held such New OP Class A LP Units through the period commencing on the date immediately following the Earnout Period End Date and ending on the Earnout Amount Payment Date.
(c) Except as prohibited by applicable Law, during the three (3)-year period commencing on the Closing Date, New OP shall, and CMFT shall cause New OP to, make cash distributions to holders of New OP LP Units, in accordance with the distribution provisions set forth in the New OP Limited Partnership Agreement, in such amounts as are sufficient to permit CMFT to declare and pay dividends to its stockholders as follows:
(i) for the first four (4) full fiscal quarters of CMFT following the Closing Date, a quarterly dividend of $0.06 per CMFT Common Share, determined as of the applicable record date;
(ii) for the next four (4) consecutive fiscal quarters of CMFT immediately following the last fiscal quarter described in Section 4.9(c)(i), a quarterly dividend of $0.07 per CMFT Common Share, determined as of the applicable record date; and
-30-
(iii) for the next four (4) consecutive fiscal quarters of CMFT immediately following the last fiscal quarter described in Section 4.9(c)(ii), a quarterly dividend of $0.095 per CMFT Common Share, determined as of the applicable record date.
This Section 4.9(c) shall terminate automatically and be of no further force or effect following the last day of the final fiscal quarter described in Section 4.9(c)(iii). Notwithstanding anything to the contrary set forth herein, the obligations of New OP and CMFT in this Section 4.9(c) may be waived, in whole or in part, at any time by the affirmative vote or written consent of a majority of the CMFT Independent Directors.
(d) For purposes of determining an amount of “Tax Distributions” to be made under Section 5.1(b) of the New OP Limited Partnership Agreement, CMFT’s Assumed Tax Liability (as defined in the New OP Limited Partnership Agreement) shall not be less than an amount that will enable CMFT to meet both its tax obligations and its obligations pursuant to the Tax Receivable Agreement for the relevant period. For the avoidance of doubt, all “Tax Distributions” to be made under Section 5.1(b) of the New OP Limited Partnership Agreement to the Partners (as defined in the New OP Limited Partnership Agreement) shall be made in accordance with and in proportion to their respective Percentage Interests (as defined in the New OP Limited Partnership Agreement), in an amount sufficient to ensure that each Partner receives a distribution at least equal to such Partner’s Assumed Tax Liability, including in the case of CMFT, as increased pursuant to this Section 4.9(d) with respect to the relevant taxable period to which the distribution relates. For U.S. federal (and applicable state and local) income Tax purposes, this Section 4.9(d) will be considered a modification of the New OP Limited Partnership Agreement as described in Section 761(c) of the Code and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Regulations promulgated thereunder.
Section 4.10 Pre-Closing Actions. To the extent that the CMFT Pre-Closing Actions have not been fully or otherwise properly consummated in all material respects in accordance with Exhibit H prior to the Closing, CMFT shall, in reasonable consultation with the CIM Contributor, undertake such corrective actions as may be reasonably necessary or appropriate to remediate the same in a manner that does not materially and adversely affect the CIM Contributor, its Affiliates, or any of their respective rights, interests, or entitlements under this Agreement or any other Transaction Document. To the extent necessary to consummate such CMFT Pre-Closing Actions following the Closing, the CIM Contributor shall use commercially reasonable efforts to assist and shall use commercially reasonable efforts to cause its Affiliates to assist CMFT to consummate such remaining CMFT Pre-Closing Actions.
Section 4.11 Key Corporate Documents; Post-Closing CMFT Governance.
(a) The CMFT Board shall consider in good faith, at the first regular meeting of the CMFT Board convened following the Closing, further amendments to the Charter and CMFT Bylaws in light of the Transactions and applicable corporate governance requirements and best practices.
-31-
(b) As soon as reasonably practicable following the Closing, CMFT shall, and shall cause the CMFT Board to, take all steps reasonably necessary to cause any current CMFT Board member that is an Affiliate of (or employed by an Affiliate of) the CIM Contributor, other than Richard Ressler, to resign as a member of the CMFT Board and to elect to the CMFT Board (i) Avraham Shemesh, (ii) Shaul Kuba, and (iii) an additional individual designated by the CIM Contributor who satisfies the independence standards referred to in the definition of CMFT Independent Directors.
(c) From and after the Closing Date, the CIM Contributor shall, at any CMFT Annual Meeting and any other meeting of stockholders of CMFT (or any other action by stockholders of CMFT), vote all of its CMFT Preferred Shares such that the terms of service of (i) T. Patrick Duncan, W. Brian Kretzmer and Howard A. Silver (in each case, if the CMFT Board has determined that such individuals are CMFT Independent Director Candidates and has nominated such individuals for election, and recommended to the stockholders of CMFT that such individuals be elected as directors of the CMFT Board at such meeting) and (ii) any additional CMFT Independent Director Candidates whose election to the CMFT Board is necessary to ensure that a majority of the directors of the CMFT Board immediately following such meeting are CMFT Independent Directors in each case will expire no sooner than the one (1) year anniversary of the earliest to occur of the following: (x) the consummation of the Listing, (y) the Recapitalization or (z) the Strategic Transaction.
Section 4.12 Employee Matters.
(a) Treatment of Existing Awards. The Parties acknowledge and agree that the Transactions do not, and shall not be deemed to, constitute a Change of Control (as defined in each Equity Plan), and accordingly, all unvested Existing Awards shall continue to operate and vest in accordance with the terms specified in the applicable award agreement pursuant to which such Existing Award was granted.
(b) 2025 Performance-Based Existing Awards. As soon as practicable following the Closing, CMFT shall take all actions necessary to issue equity awards under the 2024 Manager Plan with respect to the 2025 performance year in an aggregate amount of 2,195,923 shares subject to such equity awards (the “2025 Awards”). The 2025 Awards shall be issued to the Manager and/or the appropriate Eligible Named Executive Officer(s), as set forth herein, and shall otherwise be on such terms and conditions as are consistent with the 2024 Manager Plan and as determined by the CMFT Board or the Committee (as defined in the 2024 Manager Plan). The allocation of the 2025 Awards as between the Manager and the applicable Eligible Named Executive Officer(s) shall be mutually agreed by the Committee and the chief executive officer of CMFT.
(c) Repurchase of Vested and Unrestricted CMFT Common Shares. Following the Closing, one or more of the Contributed Entities, or a Subsidiary thereof, designated by the CIM Contributor (each, a “Purchasing Entity”), shall offer to repurchase and, to the extent the applicable holder elects to have such Eligible Shares repurchased, shall repurchase, vested and unrestricted CMFT Common Shares (the “Eligible Shares”) from the holders described in this Section 4.12(c), on the terms and conditions set forth herein (the date on which any such repurchase is consummated, the “Repurchase Date”).
-32-
(i) The Eligible Shares shall consist of CMFT Common Shares that: (i) were originally awarded by CMFT to the Manager, or directly to an Eligible Named Executive Officer, pursuant to the 2024 Manager Plan and the applicable award agreement(s); (ii) in the case of shares awarded to the Manager, were subsequently transferred by the Manager to eligible grantees in accordance with the 2024 Manager Plan (each such grantee, together with any Eligible Named Executive Officer who received a direct award, an “Eligible Seller”); and (iii) as of the Repurchase Date, are fully vested and not subject to any restrictions on transfer (including any restriction under the applicable award agreement, the 2024 Manager Plan, or applicable Law).
(ii) The CIM Contributor shall cause the repurchase contemplated by this Section 4.12(c) to be on such terms, and shall provide such information as is reasonably required to comply with applicable Law. The Purchasing Entity may, in its sole discretion, offer to repurchase all or a portion of such Eligible Seller’s Eligible Shares in such repurchase at a per-share purchase price equal to the price utilized by CMFT to repurchase CMFT Common Shares pursuant to the CMFT’s dividend reinvestment plan as of the most recent determination date established by the CMFT Board prior to the repurchase.
(d) CMFT Board or Committee Actions. The CMFT Board or any applicable committee thereof shall take, or cause to be taken, all actions reasonably necessary to give effect to the covenants set forth in this Section 4.12, including, if applicable, adopting resolutions of the CMFT Board effectuating the treatment set forth herein.
(e) Future Eligible Shares. Following the Closing, the CMFT Board and any applicable committee thereof, shall cooperate in good faith with the chief executive officer of CMFT to structure and adopt a repurchase program for the repurchase of (i) CMFT Common Shares that are not vested and unrestricted as of the Repurchase Date but that subsequently become vested and unrestricted in accordance with the terms of the applicable award agreement(s) and the applicable Equity Plan, and (ii) any additional CMFT Common Shares issued pursuant to the 2025 Awards or any future equity awards under the Equity Plans that become vested and unrestricted following the Closing (collectively, the “Future Eligible Shares”). The CMFT Board and any applicable committee thereof shall engage with the chief executive officer of CMFT in good faith regarding the terms and structure of such repurchase program, including the timing and frequency of any future repurchase opportunities. The per-share purchase price in respect of the Future Eligible Shares shall, unless otherwise determined by the CMFT Board or any applicable committee thereof, be the per-share purchase price equal to the price utilized by CMFT to repurchase CMFT Common Shares pursuant to the CMFT’s dividend reinvestment plan as of the most recent determination date established by the CMFT Board prior to the applicable Repurchase Date. To the extent that the CMFT Board (following consultation with the management of CMFT and upon approval by any applicable committee of the CMFT Board) desires to proceed with any such future repurchases of Future Eligible Shares, CMFT shall approve and consummate the repurchase of such Future Eligible Shares from Eligible Sellers on terms and conditions that are consistent with applicable Law and that are no less favorable, in all material respects, than the terms set forth in Section 4.12(c), with respect to the initial repurchase(s). For the avoidance of doubt, the obligations of CMFT and the CMFT Board and any applicable committee thereof under this Section 4.12(e) shall be in addition to, and shall not limit or modify, the repurchase obligations set forth in Section 4.12(c).
-33-
Section 4.13 Specified Actions. The Parties shall take the actions described in Section 4.13 of the CIM Disclosure Letter.
Section 4.14 Specified Acquisitions. Except with the affirmative vote or written consent of at least two of the CMFT Independent Directors in addition to any other vote or consent required by Law, from and after the date hereof until the Earnout Period End Date, none of CMFT, New OP, or any of their respective Subsidiaries shall consummate an acquisition or acquisitions from a third party of a company, firm or group of assets the primary business of which is to generate Fee-Related Revenues for consideration consisting of CMFT Common Shares or New OP LP Units representing, individually or in the aggregate with respect to all such acquisitions, fifteen percent (15%) or more of the issued and outstanding CMFT Common Shares or New OP LP Units as of the Closing Date, subject to equitable adjustment for any stock splits, reverse stock splits, reclassifications, combinations or other similar transactions (calculated on a fully grossed-up basis assuming such issuance was, or issuances were, consummated prior to the Closing Date). Notwithstanding anything to the contrary in Section 6.3 of this Agreement, the provisions of this Section 4.14 may not be amended or waived except with the affirmative vote or written consent of at least two of the CMFT Independent Directors.
Section 4.15 Further Assurances. The Parties shall execute and deliver, or shall cause to be executed and delivered, such documents and other instruments and shall take, or shall cause to be taken, such further actions as may be reasonably required to carry out the provisions of this Agreement and give effect to the Transactions.
ARTICLE V
INDEMNIFICATION
Section 5.1 Survival.
(a) Each representation, warranty, covenant and other obligation of the CIM Contributor contained in Article II of this Agreement shall survive until the applicable survival date specified in this Section 5.1(a), whereupon it shall terminate.
(i) The survival date applicable to the CIM Fundamental Representations shall be the fifty-four (54) month anniversary of the Closing.
(ii) All other representations and warranties of the CIM Contributor set forth in Article II of this Agreement will terminate upon the eighteen (18) month anniversary of the Closing.
(iii) The covenants and agreements of the CIM Contributor contained in this Agreement that are to be performed after the Closing shall survive the Closing until performed in accordance with their respective terms.
(b) The covenants and agreements of CMFT and New OP contained in this Agreement that are to be performed after the Closing shall survive the Closing until performed in accordance with their respective terms. All other representations and warranties, covenants and agreements of CMFT and New OP set forth in this Agreement will terminate at, and not survive,
-34-
the Closing (other than Section 3.13 (Exemption of New OP Class A LP Units and CMFT Preferred Shares), to the extent speaking as of the Earnout Amount Payment Date, which shall survive the Closing through (and terminate upon the occurrence of) the Earnout Amount Payment Date, and the representations and warranties set forth in Section 6.1(b) (No Other Representations or Warranties), which shall survive the Closing indefinitely).
(c) No Party shall have any liability or other obligation of any nature (whether in contract or in tort, in law or in equity or otherwise) with respect to any representation, warranty, covenant, obligation or agreement set forth in this Agreement after the expiration of the applicable survival date set forth above (other than in the case of Fraud or except as provided for pursuant to Section 5.2(a)(ii), Section 5.2(a)(iii), Section 5.2(b) or Section 5.2(c)).
Section 5.2 Indemnification.
(a) Following the Closing, the CIM Contributor shall (i) until the applicable survival dates provided in Section 5.1(a), indemnify, defend and hold harmless CMFT, New OP, the Contributed Entities and the Subsidiaries of the Contributed Entities (collectively, the “CMFT Indemnified Parties”) for, from and against all Losses actually incurred or suffered by such CMFT Indemnified Party as the result of the breach by the CIM Contributor of any representation or warranty made by the CIM Contributor in Article II of this Agreement, it being understood that for purposes of this Section 5.2 any qualifications relating to materiality (such as the term “material”) contained in such representation or warranty shall be disregarded solely for purposes of determining the quantity of such Losses, (ii) indemnify, defend and hold harmless the CMFT Indemnified Parties for, from and against all Losses actually incurred or suffered by such CMFT Indemnified Party in connection with a Third Party Claim in respect of Liabilities of, or to the extent arising out of or relating to, the CIM Businesses, whether any such Liability arises before or after Closing, is known or unknown, or contingent or accrued, and (iii) indemnify, defend and hold harmless the CMFT Indemnified Parties for, from and against all Specified Losses actually incurred by such CMFT Indemnified Party.
(b) Following the Closing, CMFT and New OP shall, and shall cause the Contributed Entities and their respective Subsidiaries to, on a joint and several basis, indemnify, defend and hold harmless the CIM Contributor, CIM Group Parent and their respective Affiliates (other than CMFT, New OP, the Contributed Entities and their respective Subsidiaries) (collectively, the “CIM Indemnified Parties”) for, from and against all Losses actually incurred or suffered by such CIM Indemnified Party in connection with a Third Party Claim in respect of Liabilities of, or to the extent arising out of or relating to, the Contributed Entities and their respective Subsidiaries or the Contributed Businesses, in each case including the ownership thereof by CMFT, New OP, the Contributed Entities and their respective Subsidiaries, whether any such Liability arises before or after Closing, is known or unknown, or contingent or accrued. Notwithstanding the foregoing, nothing in this Section 5.2(b) shall (i) absolve the CIM Indemnified Parties of, or otherwise modify, any fiduciary duty otherwise owed to CMFT, New OP, the Contributed Entities or any of their respective Subsidiaries under applicable Law or pursuant to any applicable Contract; or (ii) require CMFT, New OP, any Contributed Entity or any of their respective Subsidiaries to indemnify, defend or hold harmless any CIM Indemnified Party for any Losses that arise from, are connected to, or are in respect of, facts or circumstances for which the CIM Contributor is obligated to indemnify, defend, or hold harmless any CMFT Indemnified Party under Section 5.2(a)(iii).
-35-
(c) Notwithstanding anything to the contrary herein, the CIM Contributor shall not have any liability (i) for any Losses arising from breaches of any CIM Fundamental Representations, to the extent that the aggregate amount of such Losses exceeds $4,664,000,000; (ii) for any Losses arising from breaches of any representations or warranties of the CIM Contributor in Article II of this Agreement (other than the CIM Fundamental Representations) or any Specified Losses, to the extent that the aggregate amount of such Losses exceeds $699,600,000 (the “Cap Amount”); (iii) for any Losses arising from breaches of any representations or warranties of the CIM Contributor in Article II of this Agreement (other than the CIM Fundamental Representations) or any Specified Losses, unless and until the aggregate amount of such Losses exceeds $34,980,000 (the “Deductible Amount”), in which event the CIM Contributor shall be liable only for the amount of such Losses exceeding the Deductible Amount; or (iv) for any Losses arising from any individual item, occurrence, circumstance, act or omission (or series of related items, occurrences, circumstances, acts or omissions) that constitutes a breach of any representations or warranties of the CIM Contributor in Article II of this Agreement (other than the CIM Fundamental Representations) or a Specified Loss, unless and until the aggregate amount of Losses resulting therefrom exceeds $2,332,000 (the “Per Claim Amount”). No Losses excluded pursuant to clause (iv) of the foregoing sentence shall be taken into account for purposes of determining whether the Deductible Amount or the Cap Amount has been exceeded in respect of any claims made by CMFT Indemnified Parties.
Section 5.3 Claim Procedures
(a) In order for a person entitled to indemnification hereunder (an “Indemnified Party”) to duly make a valid claim under Section 5.2, such Indemnified Party must (promptly, but in no event more than ten (10) Business Days following the first date on which such Indemnified Party has knowledge of facts, matters or circumstances from which it is reasonably apparent that such an occurrence is likely to have occurred) provide written notice to the party liable for such indemnification (the “Indemnifying Party”), which notice shall set forth a description in reasonable detail of the occurrence(s) specified in Section 5.2 which the Indemnified Party alleges to have occurred, a description of the facts and circumstances giving rise to such occurrences, the estimated amount of Losses actually incurred or suffered as the result thereof (to the extent then ascertainable), and a description of any other remedy sought in connection therewith, any relevant time constraints relating thereto and any other material details pertaining thereto (a “Claim Notice”). The Indemnified Party shall cooperate with and provide to the Indemnifying Party such information under the Indemnified Party’s control as the Indemnifying Party may reasonably request for the purposes of determining the validity of the allegations made in the Claim Notice (other than any information subject to applicable attorney-client privilege, work product or similar privilege that would cause such information to lose such privilege) and shall keep the Indemnifying Party reasonably and promptly informed of factual and procedural developments (including additional information which may come under the Indemnified Party’s control) in connection therewith. The Indemnified Party shall use commercially reasonable efforts to avoid production of confidential information (consistent with applicable Law) to third parties and to cause all communications among employees, counsel and others representing any party to a Third Party Claim to be made so as to preserve any applicable attorney-client or work product privileges.
-36-
(b) In the event the Claim Notice results from any Action asserted or threatened against a Indemnified Party by a third party (a “Third Party Claim”):
(i) The Indemnified Party shall provide the Claim Notice to the Indemnifying Party not later than the tenth (10th) Business Day following the Indemnified Party’s receipt of the Third Party Claim, and in any event not later than the tenth (10th) Business Day preceding the date by which an appearance is required to be made before a court, arbitrator or other tribunal or an answer or similar pleading is required to be filed in a litigation or other proceeding; provided, that the failure to timely provide a Claim Notice shall not relieve the Indemnifying Party of its obligations hereunder except to the extent that such failure actually has an adverse effect on the defense or resolution of the Third Party Claim.
(ii) The Indemnifying Party shall be entitled to assume and control the defense of any Third Party Claim by notifying the Indemnified Party of such election in writing, provided, however, in the event (A) any Third Party Claim relates to or arises in connection with any Fraud or criminal matter, (B) any Third Party Claim seeks an injunction or equitable relief against such Indemnified Party, or (C) the Indemnified Party shall have concluded (upon advice of its counsel) that (I) there may be one or more legal defenses available to such Indemnified Party that are not available to the Indemnifying Party or (II) the Indemnified Party and the Indemnifying Party may have different, conflicting, or adverse legal positions or interests with respect to any Third Party Claim, then, in each case, the Indemnifying Party shall not be entitled to undertake the defense, compromise, or settlement of such Third Party Claim.
(A) In the event that the Indemnifying Party makes such election, the Indemnifying Party shall defend the Indemnified Party by appropriate proceedings and shall have the sole power (as between the Indemnifying Party and the Indemnified Party and their respective Affiliates) to direct and control such defense and the settlement, arbitration, litigation and appellate strategy relating to the Third Party Claim. The Indemnified Party shall be entitled but not obligated to participate in any such defense and to employ separate counsel of its choosing for such purpose; provided, that the fees and expenses shall be borne by the Indemnified Party and shall not be recoverable from the Indemnifying Party under this Section 5.3. If the Indemnifying Party shall control the defense of any such claim, the Indemnifying Party shall be entitled to settle such claims without the consent of the Indemnified Party; provided that the Indemnifying Party shall not be entitled to settle such claims without the consent of the Indemnified Party (such consent not to be unreasonably conditioned, withheld, or delayed) if the settlement involves any injunctive relief or finding or admission of any violation of Law or admission of any wrongdoing by the Indemnified Party.
(B) If the Indemnifying Party notifies the Indemnified Party that it is not electing to assume and control the defense of such Third Party Claim (or if the Indemnifying Party is not entitled to assume and control the defense of such Third Party Claim pursuant to Section 5.3(b)(ii)), the Indemnified Party shall assume and control such defense from the Indemnifying Party, whereupon the Indemnified Party and not the Indemnifying Party shall have the powers described in the first
-37-
sentence of Section 5.3(b)(ii)(A); provided that the Indemnified Party’s right to be indemnified, defended, held harmless and reimbursed in respect of the Third Party Claim shall not otherwise be affected by such election; provided, further, that the Indemnified Party may not settle any such matter without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed).
(iii) The Indemnified Party shall cooperate with the Indemnifying Party in order to ensure the proper and adequate investigation and defense of all Third Party Claims, including by providing reasonable access to each other’s relevant business records, documents and employees, for purposes of investigation, document production, testimony and otherwise (other than any of the foregoing which is subject to applicable attorney-client privilege, work product or similar privilege that would cause such information to lose such privilege). The Indemnified Party shall keep the Indemnifying Party fully and promptly informed with respect to the status of all Third Party Claims and shall deliver to the Indemnifying Party copies of all material written notices and documents (including court papers) received by the other that relate to any Third Party Claims. The Person controlling the defense of a Third Party Claim shall in good faith allow the Indemnifying Party or Indemnified Party, as the case may be, to make comments to the materials filed or submitted in such defense, and shall consider such comments in good faith.
(iv) All reasonable and documented out-of-pocket legal fees, costs and expenses actually incurred or suffered by the Indemnifying Party and the Indemnified Party in connection with investigating and defending, and cooperating in the investigation and defense of, the Third Party Claim (“Third Party Claim Expenses”) shall be paid as follows:
(A) Any Third Party Claim Expenses actually incurred or suffered by the Indemnified Party (1) prior to or in the absence of the making of the election described in Section 5.3(b)(ii)(A), (2) under the circumstances described in Section 5.3(b)(ii)(B) or (3) in compliance with Section 5.3(b)(iii) shall constitute Losses for which the Indemnified Party shall be entitled to be reimbursed if the Indemnified Party is determined pursuant to a Final Determination to be entitled to be indemnified, held harmless and reimbursed pursuant to this Article V in respect of the Third Party Claim.
(B) Third Party Claim Expenses actually incurred or suffered by the Indemnifying Party shall be reimbursed by the Indemnified Party if the Indemnified Party is not determined pursuant to a Final Determination to be entitled to be indemnified, held harmless and reimbursed pursuant to this Article V in respect of the Third Party Claim.
(C) Third Party Claim Expenses not addressed by Section 5.3(b)(iv)(A) or clause (B) above shall be paid by the Person by which they were incurred.
-38-
Section 5.4 Losses and Recoveries
(a) No Consequential Damages. Notwithstanding anything to the contrary contained in this Agreement, the Indemnifying Party shall not have any liability to any Indemnified Party in respect of, and Losses shall not include, (a) any consequential or indirect damages (other than, in each case, damages that are the natural and reasonably foreseeable result of the applicable breach, inaccuracy or Liability) or (b) any speculative or incidental damages or punitive, or special damages, opportunity cost or lost prospective economic advantage, or other similar damages (other than any of the foregoing to the extent actually awarded by a court of competent jurisdiction and paid to a bona fide third party).
(b) Offsetting Recoveries. In calculating the amount of any Loss, the proceeds actually received by the CMFT Indemnified Parties with respect thereto (including, for the avoidance of doubt, from any recoveries under any insurance policies or indemnification provisions under any other Contracts) shall be deducted therefrom, net of any documented out-of-pocket costs and expenses incurred in obtaining such recovery. The CMFT Indemnified Parties shall use commercially reasonable efforts to seek to recover such Losses pursuant to any insurance policies or otherwise from any third parties to the same extent the CMFT Indemnified Parties would be entitled to seek such recoveries if such Losses were not subject to indemnification hereunder. In the event that, after having complied with the preceding sentence, any Indemnified Party still has any rights against a third party with respect to any occurrence, claim or Loss that results in a payment by the Indemnifying Party under this Article V, the Indemnifying Party shall be subrogated to such rights to the extent of such payment. Each Indemnified Party shall, upon the request of the Indemnifying Party, duly execute all instruments reasonably necessary to evidence and perfect the subrogation and subordination rights detailed herein, and otherwise cooperate in the prosecution of such claims.
(c) Financial Statements. Notwithstanding anything to the contrary herein, no CMFT Indemnified Party shall be entitled to be indemnified, defended, held harmless or reimbursed pursuant to Section 5.2(a)(i) for, from or against any Loss to the extent the fact, matter, event or circumstance giving rise to the claim or on which it is based is disclosed, accrued or reserved for in the Financial Statements to the extent disclosure of such fact, matter, event or circumstance is reasonably apparent on its face and has been fully accrued or reserved for in the Financial Statements.
(d) Taxes. In calculating the amount of any Loss, there shall be deducted an amount equal to any net Tax benefit the Person claiming such Loss is entitled to recover as a result of such Loss. The amount of a net Tax benefit shall be the present value of the Tax benefit as of the date of any indemnification payment (using the interest rate calculation of Section 6621(a)(2) of the Code and assuming such Person has sufficient taxable income or other Tax attributes to permit the utilization of such Tax benefit at the earliest possible time) multiplied by (i) the combined effective Federal and state corporate tax rates in effect for such Person at the time of the indemnity payment or (ii) in the case of a credit, one hundred percent (100%).
-39-
(e) Reimbursement. If any Indemnified Party recovers an amount from a third party in respect of a Loss after all or a portion of such Loss has been paid by the Indemnifying Party pursuant to this Article V, the Indemnified Party shall promptly remit to the Indemnifying Party the excess (if any) of (i) the amount paid by the Indemnifying Party in respect of such Loss, plus the amount received from the third party in respect thereof, less (ii) the full amount of the Loss, in each case net of any documented out-of-pocket costs and expenses incurred in obtaining such recovery.
(f) Contingent Liabilities. The Indemnifying Party shall not be liable under this Article V in respect of any Loss which is contingent unless and until such contingent Loss becomes an actual liability and is due and payable; provided, however, that nothing in this Section 5.4(f) shall limit any Indemnified Party from delivering a Claim Notice in respect of facts, matters or circumstances from which it is reasonably apparent that an indemnifiable occurrence hereunder is likely to have occurred, which shall toll the applicable survival period with respect to such facts, matters or circumstances included in such Claim Notice.
(g) No Double Recovery. No Indemnified Party shall be entitled to recover more than once in respect of the same Loss (notwithstanding that such Loss may result from more than one of the occurrences specified in Section 5.2).
Section 5.5 Payments.
(a) Indemnification Payments by the CIM Contributor. No later than five (5) Business Days following any Final Determination of claims set forth in a Claim Notice submitted pursuant to Section 5.3(a), the CIM Contributor shall pay to the applicable CMFT Indemnified Party the amount of any Loss for which the CIM Contributor is determined to be liable hereunder pursuant to such Final Determination (after giving effect to the limitations, offsets and deductions set forth in this Agreement, including the limitations, offsets and deductions set forth in this Article V). Any such indemnification payment may be effected, at the sole discretion of the CIM Contributor, by one (or a combination) of the following methods: (i) paying such indemnified amount in cash by wire transfer of immediately available funds to an account or accounts designated in writing by the applicable CMFT Indemnified Party; (ii) transferring to the applicable CMFT Indemnified Party (including in the event the CMFT Indemnified Party is New OP, a transfer or surrender of New OP Class A LP Units) the number of New OP Class A LP Units held by the CIM Contributor (together with the percentage interest of any corresponding CMFT Preferred Shares held by the CIM Contributor) as of the date of the applicable Final Determination by an amount equal to (x) such indemnified amount divided by (y) $5.14 (after giving effect to any and all adjustments effected pursuant to Section 7.9 or 7.10 of the New OP Limited Partnership Agreement, including adjustments for stock splits and reverse stock splits); (iii) transferring to the applicable CMFT Indemnified Party (including in the event the CMFT Indemnified Party is CMFT, a transfer or surrender of CMFT Common Shares) the number of CMFT Common Shares held by the CIM Contributor (together with any corresponding New OP Class B LP Units held indirectly by the CIM Contributor through CMFT) as of the date of the applicable Final Determination by the quotient of (x) such indemnified amount divided by (y) $5.14 (after giving effect to any and all adjustments effected pursuant to Section 7.9 or 7.10 of the New OP Limited Partnership Agreement, including adjustments for stock splits and reverse stock splits); and/or (iv) setting off such indemnified amount against any amounts owed to the CIM Contributor under any provisions of the Transaction Documents (including, for the avoidance of doubt, Section 1.2(a)(ii) and Section 1.2(c)). For the avoidance of doubt, in the case of any payment to CMFT as the CMFT Indemnified Party on account of any Loss incurred by New OP or any of New OP’s Subsidiaries, any indemnification payment (whether in the form of cash or equity interests) pursuant to this Section 5.5(a) shall take into account CMFT’s ownership in New OP as of the date of the applicable Final Determination.
-40-
(b) Indemnification Payments by the CMFT Indemnifying Parties. No later than five (5) Business Days following any Final Determination of claims set forth in a Claim Notice submitted pursuant to Section 5.3(a), the CMFT Indemnifying Parties shall pay to the CIM Indemnified Party an amount equal to the product of (i) the amount of any Loss for which the CMFT Indemnifying Parties are determined to be liable hereunder pursuant to such Final Determination and (ii) the Non-CIM Owned Percentage. The “Non-CIM Owned Percentage” means an amount equal to the difference of (x) one hundred percent (100%) minus (y) the economic ownership percentage interest, directly or indirectly, held by the CIM Indemnified Parties in the Contributed Entities as of the time the applicable CIM Indemnified Party actually incurred or suffered such Loss. Any such indemnification payment may be effected, at the sole discretion of CMFT, by one (or a combination) of the following methods: (i) paying such indemnified amount in cash by wire transfer of immediately available funds to an account or accounts designated in writing by the applicable CIM Indemnified Party; (ii) reducing the percentage of total outstanding New OP LP Units held by CMFT as of the date of the applicable Final Determination by an amount equal to (x) such indemnified amount divided by (y) $6,910,000,000; and/or (iii) setting off such indemnified amount against any amounts owed to the CMFT Indemnifying Party under any provisions of the Transaction Documents.
Section 5.6 Minimizing and Mitigating Losses. Each Indemnified Party shall take all actions to minimize and mitigate any indemnifiable Loss as required under applicable Law.
Section 5.7 Exclusive Remedies. Following the Closing, no Indemnified Party shall assert against any Indemnifying Party any claim, cause of action, right or remedy, or any Action, relating to this Agreement, other than (a) claims pursuant to this Article V and (b) claims in respect of any breaches by any Party of its covenants under the Transaction Documents that are contemplated thereby to be performed following the Closing, subject to any limitations or other requirements set forth in this Agreement. Following the Closing, the claims and remedies specified in clauses (a) through (b) of the previous sentence shall constitute the Indemnified Parties’ sole and exclusive rights and remedies available to the Indemnified Parties for any and all Losses or other claims relating to or arising out of this Agreement, and shall supersede all other rights and remedies available at law or in equity (including any right of rescission). Notwithstanding the foregoing, nothing in this Article V shall limit: (a) any Indemnified Party’s right to seek and obtain injunctive relief for the breach of any covenant or other agreement to be performed by any Party after the Closing of this Agreement, (b) any remedy on account of Fraud, or (c) any applicable Person’s right to enforce any other Transaction Document pursuant to the terms thereof.
-41-
ARTICLE VI
MISCELLANEOUS AND GENERAL
Section 6.1 No Other Representations or Warranties.
(a) Except for the representations and warranties expressly set forth in Article II, any certificate delivered by or on behalf of the CIM Contributor pursuant to this Agreement, or in any other Transaction Document, the CIM Contributor, on behalf of itself and its Affiliates, hereby disclaims any other express or implied representation or warranty with respect to itself, CIM Group Management, CIM Group Investments, any of their respective Affiliates or any of their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects in connection with the Transactions (including any implied warranties that may otherwise be applicable because of the provisions of the Uniform Commercial Code or any other applicable Law, including the warranties of merchantability and fitness for a particular purpose) or with respect to the accuracy or completeness of any other information provided, or made available, to CMFT, New OP or any of their respective Affiliates in connection with the Transactions. CMFT and New OP acknowledge and agree that, except for the representations and warranties expressly set forth in Article II, any certificate delivered by or on behalf of the CIM Contributor pursuant to this Agreement, or in any other Transaction Document, neither the CIM Contributor nor any other Person has made any express or implied representation or warranty with respect to the Transactions (including any implied warranties that may otherwise be applicable because of the provisions of the Uniform Commercial Code or any other applicable Law, including the warranties of merchantability and fitness for a particular purpose) or with respect to the accuracy or completeness of any other information provided, or made available, to CMFT, New OP or any of their respective Affiliates in connection with the Transactions and CMFT and New OP have not relied on any representation or warranty other than those expressly set forth in Article II, any certificate delivered by or on behalf of the CIM Contributor pursuant to this Agreement, or in any other Transaction Document; provided, however, that notwithstanding anything to the contrary set forth in the foregoing provisions of this Section 6.1(a), nothing in this Section 6.1(a) shall limit CMFT’s or New OP’s remedies with respect to claims of Fraud.
(b) Except for the representations and warranties expressly set forth in Article III, any certificate delivered by or on behalf of CMFT or New OP pursuant to this Agreement, or in any other Transaction Document, CMFT and New OP, on behalf of themselves and their respective Affiliates, hereby disclaim any other express or implied representation or warranty with respect to CMFT, New OP or any of their respective Affiliates or any of their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects in connection with the Transactions (including any implied warranties that may otherwise be applicable because of the provisions of the Uniform Commercial Code or any other applicable Law, including the warranties of merchantability and fitness for a particular purpose) or with respect to the accuracy or completeness of any other information provided, or made available, to the CIM Contributor or any of its Affiliates in connection with the Transactions. The CIM Contributor acknowledges and agrees that, except for the representations and warranties expressly set forth in Article III, any certificate delivered by or on behalf of CMFT or New OP pursuant to this Agreement, or in any other Transaction Document, none of CMFT, New OP nor any other Person has made any express or implied representation or warranty with respect to the
-42-
Transactions (including any implied warranties that may otherwise be applicable because of the provisions of the Uniform Commercial Code or any other applicable Law, including the warranties of merchantability and fitness for a particular purpose) or with respect to the accuracy or completeness of any other information provided, or made available, to the CIM Contributor or any of its Affiliates in connection with the Transactions and the CIM Contributor has not relied on any representation or warranty other than those expressly set forth in Article III, any certificate delivered by or on behalf of CMFT or New OP pursuant to this Agreement, or in any other Transaction Document; provided, however, that notwithstanding anything to the contrary set forth in the foregoing provisions of this Section 6.1(b), nothing in this Section 6.1(b) shall limit the CIM Contributor’s remedies with respect to claims of Fraud.
Section 6.2 Amendment; Waiver. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by CMFT, New OP and the CIM Contributor, or in the case of a waiver, by the Party granting the waiver. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.
Section 6.3 Expenses. Except as otherwise provided in this Agreement and the other Transaction Documents, all costs and expenses (including fees and expenses of counsel and financial advisors, if any) incurred in connection with this Agreement and the Transactions shall be paid by New OP. For the avoidance of doubt, the CIM Contributor has already paid the HSR Filing Fee in its entirety, and New OP agrees to reimburse the CIM Contributor for the full amount of the HSR Filing Fee.
Section 6.4 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.
Section 6.5 GOVERNING LAW; ARBITRATION.
(a) This Agreement, and all Actions (whether in contract, tort or statute) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be governed by, and enforced in accordance with, the Laws of the State of Delaware, including its statutes of limitations, without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction (whether of the State of Delaware or any other jurisdiction) would be required thereby.
(b) Notwithstanding anything to the contrary contained in this Agreement, all claims, disputes and controversies between the Parties arising out of or in connection with this Agreement shall be resolved by binding arbitration in Los Angeles, California by the American Arbitration Association (the “AAA”), in accordance with this Section 6.5. Any arbitration called for by this Section 6.5 shall be conducted in accordance with the following procedures:
(i) A Party may demand arbitration pursuant to this Section 6.5 at any time by giving written notice of such demand (the “Demand Notice”) to all other Parties, which Demand Notice shall describe in reasonable detail the nature of the claim, dispute or controversy.
-43-
(ii) Within fifteen (15) days after the giving of a Demand Notice or such additional time as required by the AAA, the AAA shall select and designate in writing three (3) reputable and disinterested individuals willing to act as an arbitrator of the claim, dispute or controversy in question.
(iii) The presentations of the Parties in the arbitration proceeding shall be commenced and completed within sixty (60) days after the selection of the arbitration panel pursuant to clause (b) above, and the arbitration panel shall render its decision (and specify in reasonable detail its reasons therefor) in writing within thirty (30) days after the completion of such presentations. Any decision concurred in by any two (2) of the arbitrators shall constitute the decision of the arbitration panel, and unanimity shall not be required.
(iv) The arbitration panel shall include in its decision a direction that all of the attorneys’ fees and costs of any Party or Parties and the costs of such arbitration be paid by the losing Party or Parties in the arbitration. On the application of a Party before or after the initial decision of the arbitration panel, and proof of its attorneys’ fees and costs, the arbitration panel shall order the other Party to make any payments directed pursuant to the preceding sentence.
Any decision rendered by the arbitration panel in accordance herewith shall be final and binding on the Parties, and judgment thereon may be entered by any state or federal court of competent jurisdiction. Except as otherwise provided for in this Agreement or in any other Transaction Document, arbitration shall be the exclusive method available for resolution of claims, disputes and controversies arising between and among the parties relating to this Agreement and the conduct of the Parties in relation to this Agreement, and the Parties stipulate that the provisions of this Agreement shall be a complete defense to any suit, action or proceeding in any court or before any administrative or arbitration tribunal with respect to any such claim, controversy or dispute.
Section 6.6 Notices. All notices and other communications to be given or made hereunder shall be in writing and shall be deemed to have been duly given or made on the date of delivery to the recipient thereof if received prior to 5:00 p.m. in the place of delivery and such day is a Business Day (or otherwise on the next succeeding Business Day) if (a) served by personal delivery or by an internationally recognized overnight courier to the Person or entity for whom it is intended, (b) delivered by registered or certified mail, return receipt requested, or (c) when sent to the recipient by electronic transmission (provided that no failure message is generated) to the e-mail address specified below:
-44-
To the CIM Contributor:
CIM Group
4700 Wilshire Boulevard
Los Angeles, CA 90010
Attn: Avraham Shemesh
Email: [email protected]
With a copy (which shall not constitute notice) to:
Sullivan & Cromwell LLP
1888 Century Park East
Los Angeles, CA 90067
Attn: Patrick S. Brown
Email: [email protected]
To CMFT or New OP:
CIM Real Estate Finance Trust, Inc.
2398 East Camelback Road, 4th Floor
Phoenix, AZ 85016
Attn: David Thompson
Email: [email protected]
With a copy (which shall not constitute notice) to:
Taft, Stettinius & Hollister LLP
3343 Peachtree Road NE, Suite 1600
Atlanta, GA 30326
Attn: Lauren B. Prevost; Seth Weiner
Email: [email protected]; [email protected]
or to such other Person or addressees as may be designated in writing by the Party to receive such notice as provided above; provided, however, that copies shall be provided to outside counsel for convenience only, such copies shall not, in and of themselves, constitute notice and the failure to provide any such copy shall not alter the effectiveness of any notice or other communication otherwise duly made or given.
Section 6.7 Entire Agreement. This Agreement (including any exhibits, annexes or schedules hereto) and the other Transaction Documents constitute the entire agreement and supersede all other prior agreements, understandings, representations and warranties both written and oral, among the Parties, with respect to the subject matter hereof.
Section 6.8 No Third-Party Beneficiaries. Except as otherwise provided in Section 4.3 (Release), Article V (Indemnification), this Section 6.8 (No Third-Party Beneficiaries), Section 6.13 (No Rights Against Nonparties) and Section 6.14 (Waiver of Conflicts Regarding Representation; Nonassertion of Attorney-Client Privilege), or as otherwise provided for under any other Transaction Document, there shall be no third-party beneficiaries of this Agreement, any other Transaction Document or any exhibit, annex or schedule hereto or thereto, and none of them shall confer on any Person other than the parties hereto and thereto any claim, cause of action, right or remedy.
-45-
Section 6.9 Obligations of New OP and of CMFT. Whenever this Agreement requires a Subsidiary of New OP to take any action, such requirement shall be deemed to include an undertaking on the part of New OP to cause such Subsidiary to take such action. Whenever this Agreement requires a Subsidiary of CMFT to take any action, such requirement shall be deemed to include an undertaking on the part of CMFT to cause such Subsidiary to take such action.
Section 6.10 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision, covenant or restriction of this Agreement is held by a court or other authority of competent jurisdiction to be invalid, void or unenforceable, or the application of such provision, covenant or restriction to any Person or any circumstance, is held by a court or other authority of competent jurisdiction to be invalid, void or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision, covenant or restriction to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application of such provision, in any other jurisdiction and the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.
Section 6.11 Interpretation; Construction.
(a) The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to an Annex, Exhibit, Section or Schedule, such reference shall be to an Annex, Exhibit, Section or Schedule to this Agreement unless otherwise indicated.
(b) If a term is defined as one part of speech (such as a noun), it shall have a corresponding meaning when used as another part of speech (such as a verb). The terms defined in the singular have a comparable meaning when used in the plural and vice versa. The rule known as the ejusdem generis rule shall not apply, and, accordingly, general words introduced by the word “other” shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things. Unless the context of this Agreement clearly requires otherwise, words importing the masculine gender shall include the feminine and neutral genders and vice versa. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “or” shall not be exclusive. Currency amounts referenced herein are in U.S. Dollars. Any capitalized term used in any Schedule, Annex or Exhibit but not otherwise defined therein shall have the meaning given to it in this Agreement. References to “written” or “in writing” include documents in electronic form or transmission by email. A reference to any Person includes such Person’s successors and permitted assigns.
-46-
(c) Except as otherwise specifically provided herein, all references in this Agreement to any Law include the rules and regulations promulgated thereunder, in each case as amended, re-enacted, consolidated or replaced from time to time and in the case of any such amendment, re-enactment, consolidation or replacement, reference herein to a particular provision shall be read as referring to such amended, re-enacted, consolidated or replaced provision and shall also include, unless the context otherwise requires, all applicable guidelines, bulletins or policies made in connection therewith. Any agreement or instrument referred to herein means such agreement or instrument as from time to time amended, modified or supplemented, including by waiver or consent and all attachments thereto and instruments incorporated therein.
(d) Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. Whenever any action must be taken hereunder on or by a day that is not a Business Day, then such action may be validly taken on or by the next day that is a Business Day.
(e) Each representation, warranty, covenant and condition herein shall be given full, separate and independent effect. The provisions hereof are cumulative. A more specific provision shall limit the applicability of any other, more general, provision.
(f) The Parties drafted this Agreement jointly through the exchange of drafts hereof, so there shall be no presumption or burden of proof favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.
(g) Neither the specification of any dollar amount, item or matter in any representation or warranty contained in this Agreement nor the inclusion of any specific item in the CIM Disclosure Letter, the CMFT Disclosure Letter, any Annex or any Exhibit is intended to imply that such amount, or higher or lower amounts, or the item or matter so included or other items or matters, are or are not material or are or are not in the ordinary course of business, and no Party shall use the fact of the setting forth of any such amount or the inclusion of any such item or matter in any dispute or controversy between the Parties as to whether any obligation, item or matter not described herein or included in the CIM Disclosure Letter, the CMFT Disclosure Letter, any Annex or any Exhibit is or is not material or is or is not in the ordinary course of business for purposes of this Agreement.
Section 6.12 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, legal representatives and permitted assigns. No Party to this Agreement may assign any of its rights or delegate any of its obligations under this Agreement, by operation of Law or otherwise, without the prior written consent of the other Parties, except that the CIM Contributor may assign any and all of its rights or obligations under this Agreement or any other Transaction Document to one or more of its Affiliates or any other Permitted Transferees (as defined in the New OP Limited Partnership Agreement). Any purported assignment in violation of this Agreement is void.
-47-
Section 6.13 No Rights Against Nonparties. This Agreement may only be enforced against, and any Action, right or remedy that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement, may only be made against the Persons that are expressly identified as Parties to this Agreement, and no Party shall at any time assert against any Person (other than a Party) that is a director, officer, employee, shareholder, general or limited partner, member, manager, agent or Affiliate or Representative of another Party (each, a “Nonparty”), any claim, cause of action, right or remedy, or any Action, relating to this Agreement. Each Party hereby waives and discharges any such claim, cause of action, right, remedy and Action, and releases (and agrees to execute and deliver any instrument necessary to effectuate the release of) each Nonparty therefrom. The provisions of this Section 6.13 are for the benefit of and shall be enforceable by each Nonparty, which is an intended third-party beneficiary of this Section 6.13 and, to the extent such Nonparty is a CIM Releasee or CMFT Releasee, Section 4.3 in connection herewith.
Section 6.14 Waiver of Conflicts Regarding Representation; Nonassertion of Attorney-Client Privilege.
(a) Conflicts of Interest. CMFT and New OP acknowledge that Sullivan & Cromwell LLP and Ballard Spahr LLP (“Prior Company Counsel”) have, on or prior to the Closing Date, represented the CIM Contributor, the Contributed Entities and their Subsidiaries, certain other Affiliates of the CIM Contributor, and their respective officers, employees and directors (each such Person, other than the Contributed Entities and their Subsidiaries and any officer, employee or director of the Contributed Entities or any of the Contributed Entities’ Subsidiaries in his or her capacity as such, a “Designated Person”) in one or more matters relating to this Agreement (including any matter that may be related to a litigation, claim or dispute arising under or related to this Agreement) (each, an “Existing Representation”), and that, in the event of any post-Closing matters (x) relating to this Agreement (including any matter that may be related to a litigation, claim or dispute arising under or related to this Agreement) and (y) in which CMFT or New OP or any of their respective Affiliates (including the Contributed Entities and their Subsidiaries, but excluding, for the avoidance of doubt, any of the Designated Persons), on the one hand, and one or more Designated Persons, on the other hand, are or may be adverse to each other (each, a “Post-Closing Matter”), the Designated Persons reasonably anticipate that Prior Company Counsel will represent them in connection with such matters. Accordingly, each of CMFT and New OP, on behalf of itself and the Contributed Entities and the Contributed Entities’ Subsidiaries hereby (i) waives and shall not assert, and agrees after the Closing to cause its Affiliates (excluding, for the avoidance of doubt, the Designated Persons) to waive and to not assert, any conflict of interest arising out of or relating to the representation by one or more Prior Company Counsel of one or more Designated Persons in connection with one or more Post-Closing Matters (the “Post-Closing Representation”) and (ii) agrees that, in the event that a Post-Closing Matter arises, Prior Company Counsel may represent one or more Designated Persons in such Post-Closing Matter even though the interests of such Person(s) may be directly adverse to CMFT or any of its Affiliates (including the Contributed Entities and the Contributed Entities’ Subsidiaries, but excluding, for the avoidance of doubt, any of the Designated Persons), and even though Prior Company Counsel may (A) have represented the Contributed Entities and the Contributed Entities’ Subsidiaries in a matter substantially related to such dispute or (B) be currently representing the Contributed Entities and the Contributed Entities’ Subsidiaries. Without limiting the foregoing, each of CMFT and New OP, on behalf of itself and the Contributed Entities
-48-
and the Contributed Entities’ Subsidiaries, consents to the disclosure by Prior Company Counsel, in connection with one or more Post-Closing Representations, to the Designated Persons of any information substantially related to such Post-Closing Representations learned by Prior Company Counsel in the course of one or more Existing Representations, whether or not such information is subject to the attorney-client privilege of the Contributed Entities or any Subsidiary of the Contributed Entities or Prior Company Counsel’s duty of confidentiality as to the Contributed Entities or any Subsidiary of the Contributed Entities and whether or not such disclosure is made before or after the Closing; provided, that, the Designated Persons will keep any such information confidential to the extent required by Section 4.1.
(b) Attorney-Client Privilege. Each of CMFT and New OP (on behalf of itself and its Affiliates, but excluding, for the avoidance of doubt, any of the Designated Persons) waives and shall not assert, and agrees after the Closing to cause such Affiliates to waive and to not assert, any attorney-client privilege, attorney work-product protection or expectation of client confidence with respect to any communication between any Prior Company Counsel, on the one hand, and any Designated Person or the Contributed Entities or any Subsidiary of the Contributed Entities, on the other hand (collectively, the “Pre-Closing Designated Persons”), or any advice given to any Pre-Closing Designated Person by any Prior Company Counsel, in each case to the extent occurring during one or more Existing Representations (collectively, “Pre-Closing Privileges”) in connection with any Post-Closing Representation, including in connection with a dispute between any Designated Person and one or more of CMFT, New OP, the Contributed Entities and the Contributed Entities’ Subsidiaries and their respective Affiliates (excluding, for the avoidance of doubt, the Designated Persons), it being the intention of the Parties hereto that all rights to such Pre-Closing Privileges, and all rights to waive or otherwise control such Pre-Closing Privileges, shall be retained by the CIM Contributor, and shall not pass to or be claimed or used by CMFT, New OP, the Contributed Entities or the Contributed Entities’ Subsidiaries, except as provided in the last sentence of this Section 6.14(b). Furthermore, each of CMFT and New OP, on behalf of itself and the Contributed Entities and the Contributed Entities’ Subsidiaries, acknowledges and agrees that any advice given to or communication with any of the Designated Persons to the extent related to an Existing Representation or a Post-Closing Representation shall not be subject to any joint privilege (whether or not either of the Contributed Entities or the Contributed Entities’ Subsidiaries also received such advice or communication) and shall be owned solely by such Designated Persons. Notwithstanding the foregoing, in the event that a dispute arises between CMFT, New OP, the Contributed Entities or any Subsidiary of the Contributed Entities, on the one hand, and a third party other than a Designated Person, on the other hand, CMFT shall (and shall cause the Contributed Entities or any Subsidiary of the Contributed Entities, as applicable, to) assert to the extent available the Pre-Closing Privileges on behalf of the Designated Persons to prevent disclosure of Privileged Materials to such third party; provided, however, that such privilege may be waived only with the prior written consent of the CIM Contributor, which consent shall not be unreasonably conditioned, withheld or delayed.
(c) Privileged Materials. All such Pre-Closing Privileges, and all books and records and other documents of the Contributed Entities and the Contributed Entities’ Subsidiaries solely to the extent containing any advice or communication that is subject to any Pre-Closing Privilege (“Privileged Materials”), shall be deemed excluded from the acquisition of the Contributed Interests, and shall be distributed to the CIM Contributor (on behalf of the applicable Designated Persons) immediately prior to the Closing with (in the case of such books
-49-
and records to the extent containing any Privileged Materials) no copies retained by the Contributed Entities or their Subsidiaries. Absent the prior written consent of the CIM Contributor (which consent shall not be unreasonably conditioned, withheld or delayed), none of CMFT, New OP or, following the Closing, the Contributed Entities and the Contributed Entities’ Subsidiaries, shall have a right of access to Privileged Materials. CMFT and New OP hereby agree not to search for or intentionally use any Privileged Materials existing on CMFT’s or New OP’s servers, electronic backup systems, e-mail archives or any other books and records after the Closing, and the CIM Contributor, on the one hand, and CMFT and New OP, on the other hand, agree to take all reasonable steps necessary to ensure such privilege shall survive the Closing.
[Signature Page Follows]
-50-
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above.
| CIM GROUP HOLDINGS, LLC | ||||
| By: | /s/ David Thompson | |||
| Name: | David Thompson | |||
| Title: | Vice President and Chief Financial Officer | |||
| CIM REAL ESTATE FINANCE TRUST, INC. | ||||
| By: | /s/ Nathan DeBacker | |||
| Name: | Nathan DeBacker | |||
| Title: | Chief Financial Officer, Principal Accounting Officer and Treasurer | |||
| CIM FINANCE HOLDINGS, LP | ||||
| By: | CIM Finance Holdings GP, LLC | |||
| Title: | General Partner | |||
| By: | CIM Real Estate Finance Trust, Inc. | |||
| Title: | Sole Member | |||
| By: | /s/ Nathan DeBacker | |||
| Name: | Nathan DeBacker | |||
| Title: | Chief Financial Officer, Principal Accounting Officer and Treasurer | |||
[Signature Page to Contribution and Subscription Agreement]
EXHIBIT A
DEFINITIONS
As used in this Agreement, the following terms have the meanings specified in this Exhibit A.
“2022 Plan” means the Amended and Restated CIM Real Estate Finance Trust, Inc. 2022 Equity Incentive Plan, as may be amended from time to time.
“2024 Manager Plan” means the CIM Real Estate Finance Trust, Inc. 2024 Manager Equity Incentive Plan, as may be amended from time to time.
“2025 Awards” has the meaning set forth in Section 4.12(b).
“AAA” has the meaning set forth in Section 6.5(b).
“Action” means any action, cause of action, claim, demand, litigation, suit, investigation, review, grievance, citation, summons, subpoena, inquiry, audit, hearing, originating application to a tribunal, arbitration or other similar proceeding of any nature, whether civil, criminal, regulatory, administrative or otherwise, or whether in equity or at law, in contract, in tort or otherwise, in each case, by or before or otherwise involving a Governmental Entity or arbitration or similar tribunal (whether public or private).
“Additional Cash Consideration” has the meaning set forth in Section 1.1.
“Affiliate” means, with respect to any Person, (i) any Person directly or indirectly controlling, controlled by or under common control with such Person; (ii) any executive officer, director, trustee or general partner of such Person; and (iii) any legal entity for which such Person acts as an executive officer, director, trustee or general partner. Notwithstanding the foregoing or anything to the contrary in this Agreement, for purposes of any representation made by the CIM Contributor hereunder with respect to “Affiliates” of the CIM Contributor or any of the Contributed Entities, or any obligation hereunder of the CIM Contributor to cause any of “Affiliates” of the CIM Contributor or any of the Contributed Entities to take (or to refrain from taking) any particular action, no investment fund, managed account, investment account, client account, co-investment vehicle, portfolio investment, portfolio company or other investment client or recipient of investment advisory, sub-advisory, management or other similar services (and no subsidiaries of any of the foregoing Persons) shall be deemed an “Affiliate” of the CIM Contributor or any of the Contributed Entities.
“Alternative Opportunity” means any opportunity to invest in a company or firm the primary business of which is to generate Fee-Related Revenues from real estate, infrastructure, and/or real asset management services; provided, that, the following shall not be considered “Alternative Opportunities”: (i) any investment in any publicly traded company made without the intention to gain control thereof and that does not result in a CIM Principal acquiring more than 5% ownership of the total issued and outstanding common shares of such publicly traded company (after giving effect to such contemplated investment) and (ii) any interests in the following businesses in existence on the date hereof (including any Subsidiaries thereof, successors thereto, and/or any opportunities presented to any CIM Principal, directly or indirectly, as a result of his affiliation therewith): SKR Group, Orchard First Source Management, or OCV Management shall not be considered an “Alternative Opportunity”.
A-1
“Agreement” has the meaning set forth in the Preamble.
“Bankruptcy and Equity Exception” has the meaning set forth in Section 2.2.
“Business Day” means any day other than (a) a Saturday or a Sunday or (b) a day on which banking and savings and loan institutions are authorized or required by Law to be closed in New York City.
“Cap Amount” has the meaning set forth in Section 5.2(c).
“Cash Consideration” has the meaning set forth in the Recitals.
“Charter” means the Articles of Incorporation of CMFT and all amendments and supplements thereto, as from time to time filed with and accepted for record by the Department, including upon acceptance for record by the Department the CMFT Articles of Amendment and CMFT Articles Supplementary.
“CIM Businesses” mean the businesses, activities and operations of the CIM Contributor, CIM Group Parent and their respective Affiliates (other than CMFT, New OP, the Contributed Entities and their respective Subsidiaries). For the avoidance of doubt, the term “CIM Businesses” excludes the Contributed Businesses.
“CIM Contribution” has the meaning set forth in Section 1.1.
“CIM Contributor” has the meaning set forth in the Preamble.
“CIM Disclosure Letter” has the meaning set forth in Article II.
“CIM Fundamental Representations” means the representations and warranties of the CIM Contributor set forth in Section 2.1(a) (Organization, Good Standing and Qualification), Section 2.2 (Authority; Approval), Section 2.3(a) (Ownership of Interests; Capitalization), Section 2.4 (Governmental Filings; No Violations), and Section 2.11 (Brokers and Finders).
“CIM Group Holdings” has the meaning set forth in the Preamble.
“CIM Group Investments” has the meaning set forth in the Recitals.
“CIM Group Investments Interests” has the meaning set forth in the Recitals.
“CIM Group Management” has the meaning set forth in the Recitals.
“CIM Group Management Interests” has the meaning set forth in the Recitals.
A-2
“CIM Group Parent” means CIM Group, LLC, a Delaware limited liability company.
“CIM Indemnified Parties” has the meaning set forth in Section 5.2(b).
“CIM Pre-Closing Actions” has the meaning set forth in the Recitals.
“CIM Principals” means, collectively, Richard Ressler, Avraham Shemesh and Shaul Kuba.
“CIM Related Persons” has the meaning set forth in Section 4.3(a).
“CIM Releasee” has the meaning set forth in Section 4.3(b).
“Class A Limited Partnership Units” has the meaning ascribed to it in the New OP Limited Partnership Agreement.
“Claim Notice” has the meaning set forth in Section 5.3(a).
“Closing” has the meaning set forth in Section 1.3.
“Closing Date” has the meaning set forth in Section 1.3.
“CMFT” has the meaning set forth in the Preamble.
“CMFT Annual Meeting” means the first meeting of the stockholders of CMFT at which such stockholders may elect directors to the CMFT Board.
“CMFT Articles of Amendment” means the instrument pursuant to which the Charter as in effect as of immediately prior to the execution and delivery hereof will be amended to increase the total number of shares of Common Stock that the Company is authorized to issue from 490,000,000 to 2,000,000,000 and the total number of shares of preferred stock, $0.01 par value per share, of the Company that the Company is authorized to issue from 10,000,000 to 1,100,000,000.
“CMFT Articles Supplementary” means the instrument classifying, designating and setting the terms of the CMFT Preferred Shares, to be effective at the Closing in the form of Exhibit F hereto.
“CMFT Board” has the meaning set forth in Section 1.4(c)(iv).
“CMFT Bylaws” means the Third Amended and Restated Bylaws of CMFT to be effective at the Closing in the form of Exhibit G hereto.
“CMFT Company Group” means, collectively, CMFT, any Subsidiary treated as a “corporation” under the Code with respect to CMFT, and any entity that is otherwise a Subsidiary with respect to CMFT.
A-3
“CMFT Company Group Member” means any member of the CMFT Company Group.
“CMFT Common Shares” means shares of common stock, par value $0.01 per share, of CMFT (or its successor, as the case may be).
“CMFT Disclosure Letter” has the meaning set forth in Article III.
“CMFT Entities” has the meaning set forth in Section 3.2(a).
“CMFT Financial Statements” has the meaning set forth in Section 3.6(a).
“CMFT Indemnified Parties” has the meaning set forth in Section 5.2(a).
“CMFT Indemnifying Parties” means CMFT, New OP, the Contributed Entities and their respective Subsidiaries.
“CMFT Independent Directors” means those members of the CMFT Board who are determined by the CMFT Board to satisfy the independence standard or standards most recently utilized by the CMFT Board for purposes of Item 407 of Regulation S-K, which standards are described in CMFT’s Annual Report on Form 10-K or proxy statement filed with the SEC for the most recent fiscal year.
“CMFT Independent Director Candidates” means, with respect to any meeting of the stockholders of CMFT at which such stockholders may elect directors to the CMFT Board, any director nominees to the CMFT Board in whose favor the CMFT Board has recommended that the stockholders of CMFT vote and whom the CMFT Board has determined satisfy the independence standard or standards most recently utilized by the CMFT Board for purposes of Item 407 of Regulation S-K, which standards are described in CMFT’s Annual Report on Form 10-K or proxy statement filed with the SEC for the most recent fiscal year.
“CMFT Pre-Closing Actions” has the meaning set forth in the Recitals.
“CMFT Preferred Shares” has the meaning set forth in the Recitals.
“CMFT Preferred Votes” means the number of votes that the CMFT Preferred Shares entitle the holders thereof to cast with respect to any matter as to which the holders of CMFT Preferred Shares are entitled to cast votes under the Charter and applicable Law.
“CMFT Related Persons” has the meaning set forth in Section 4.3(b).
“CMFT Released Parties” has the meaning set forth in Section 4.3(a).
“CMFT Releasee” has the meaning set forth in Section 4.3(a).
“CMFT SEC Documents” has the meaning set forth in Section 3.5(a).
“Code” means the Internal Revenue Code of 1986.
A-4
“Confidentiality Agreement” has the meaning set forth in Section 4.1.
“Consent Rights Expiration Time” has the meaning ascribed to it in the New OP Limited Partnership Agreement.
“Contract” means any agreement, undertaking, lease, license, contract, note, mortgage, indenture, arrangement or other obligation.
“Contributed Businesses” mean the businesses, activities and operations of the Contributed Entities and their respective Subsidiaries.
“Contributed Entities” has the meaning set forth in the Recitals.
“Contributed Interests” has the meaning set forth in the Recitals.
“Deductible Amount” has the meaning set forth in Section 5.2(c).
“Demand Notice” has the meaning set forth in Section 6.5(b)(i).
“Department” has the meaning set forth in Section 1.4(c)(ii).
“Designated Person” has the meaning set forth in Section 6.14(a).
“DOJ” means the Antitrust Division of the Department of Justice.
“Earnout Amount” has the meaning set forth in Section 1.5(a)(i).
“Earnout Amount Payment Date” has the meaning set forth in Section 1.5.
“Earnout Definitions and Principles” has the meaning set forth in Section 1.5(b)(i).
“Earnout Payment Schedule” has the meaning set forth in Section 1.5(a)(i).
“Earnout Period” has the meaning set forth in Annex A hereto.
“Earnout Period End Date” has the meaning set forth in Annex A hereto.
“Earnout Statement” has the meaning set forth in Section 1.5(b)(i).
“Earnout Statement Deadline” has the meaning set forth in Annex A hereto.
“Earnout Statement Dispute” has the meaning set forth in Section 1.5(b)(iii).
“Earnout Statement Objection” has the meaning set forth in Section 1.5(b)(ii).
“Earnout Target” has the meaning set forth in Annex A hereto.
“Eligible Named Executive Officer” has the meaning ascribed thereto in the 2024 Manager Plan.
A-5
“Eligible Seller” has the meaning set forth in Section 4.12(c)(i).
“Eligible Shares” has the meaning set forth in Section 4.12(c).
“Equity Plans” means, collectively, (i) the 2022 Plan and (ii) the 2024 Manager Plan.
“Existing Awards” means all outstanding Stock Incentive awards (as defined in the applicable Equity Plan) granted to any Participant (as defined in the applicable Equity Plan) under either of the Equity Plans as of the date of Closing.
“Equity Interest” means, with respect to any Person, (a) any capital stock, partnership or membership interest, joint venture interest, unit of participation or other similar interest (however designated) in such Person and (b) any option, warrant, call, right (including purchase rights, conversion rights, exchange rights, preemptive rights, co-sale rights, rights of first refusal and similar rights) or other contract which would entitle any other Person to acquire any such interest in such Person.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Execution Date” has the meaning set forth in the Preamble.
“Existing OP” means CIM Real Estate Finance Operating Partnership, LP.
“Existing OP Limited Partnership Agreement” means the Second Amended and Restated Agreement of Limited Partnership of CIM Real Estate Finance Operating Partnership, LP, to be entered into at the Closing in the form of Exhibit E hereto, by and among New OP and the other parties thereto.
“Existing Representation” has the meaning set forth in Section 6.14(a).
“Fee-Related Revenues” has the meaning set forth in Annex A hereto.
“Fee-Related Revenues Calculation” has the meaning set forth in Section 1.5(b)(i).
“Final Determination” means, with respect to a dispute, an occurrence where (a) a court of competent jurisdiction shall have entered a final and non-appealable Order or judgment with respect to a claim, (b) an arbitration or like panel shall have rendered a final non-appealable determination with respect to disputes the CIM Contributor and the applicable CMFT Indemnified Parties have agreed to submit thereto, or (c) the CIM Contributor and the applicable CMFT Indemnified Parties have agreed to resolve such dispute by a written settlement, consent or agreement.
“Financial Statements” has the meaning set forth in Section 2.5(a).
“FINRA Rule 1017” means Rule 1017 of the rules of the Financial Industry Regulatory Authority, Inc., entitled Application for Approval of Change in Ownership, Control, or Business Operations, as amended, supplemented, renumbered or replaced from time to time, including any successor rule.
A-6
“Fraud” means actual common law fraud under the Laws of the State of Delaware with respect to the making of the representations and warranties set forth in this Agreement. For the avoidance of doubt, “Fraud” does not include constructive fraud, negligence, gross negligence, or recklessness.
“FTC” means the Federal Trade Commission.
“Future Eligible Shares” has the meaning set forth in Section 4.12(e).
“GAAP” means United States generally accepted accounting principles.
“Governmental Entity” means any domestic or non-U.S. legislative, administrative or regulatory authority, agency, commission, body, court or other governmental or quasi-governmental entity of competent jurisdiction, including any supranational body.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
“HSR Filing Fee” means all filing costs related to the filing by the Parties in connection with the Transactions of any Notification and Report Forms with the FTC and the DOJ pursuant to the HSR Act.
“Indemnified Party” has the meaning in Section 5.3(a).
“Indemnifying Party” has the meaning in Section 5.3(a).
“Interim Balance Sheet” has the meaning set forth in Section 2.5(a).
“Interim Income Statement” has the meaning set forth in Section 2.5(a).
“Interim Financial Statements” has the meaning set forth in Section 2.5(a).
“Law” or “Laws” means any law, statute, ordinance, common law, rule, regulation, Order or other legal requirement enacted, issued, promulgated, enforced or entered by a Governmental Entity of competent jurisdiction.
“Liability” shall mean all obligations and other liabilities, whether absolute, accrued, matured, contingent (or based upon any contingency), known or unknown, fixed or otherwise, or whether due or to become due, including any fines, penalties, losses, costs, interest, charges, expenses, damages, assessments, deficiencies, judgments, awards or settlements.
“Lien” means any lien, charge, pledge, mortgage, easement, hypothecation, usufruct, deed of trust, security interest, claim or other encumbrance.
“Listing” has the meaning set forth in Section 4.5(a).
“Listing Outside Date” has the meaning set forth in Section 4.7(a).
A-7
“Losses” means any and all damages, losses, charges, liabilities, claims, demands, actions, suits, proceedings, payments, judgments, settlements, assessments, deficiencies, taxes, interest, penalties and costs and expenses (including removal costs, remediation costs, closure costs, fines, penalties and lost profits).
“Management Agreement” means the Second Amended and Restated Management Agreement, by and among CMFT and CIM Real Estate Finance Management, LLC, dated March 24, 2023.
“Manager” means CIM Real Estate Finance Management, LLC, or any successor manager that is an Affiliate of CIM Group, L.P.
“Neutral Accountant” means a nationally recognized independent (as to CMFT, CIM Group Holdings and New OP) accounting firm mutually acceptable to CMFT and the CIM Contributor.
“Neutral Accountant Election” has the meaning set forth in Section 1.5(b)(iv).
“New OP” has the meaning set forth in the Preamble.
“New OP Class A LP Units” has the meaning set forth in the Recitals.
“New OP Class A-1 LP Units” means the Class A Limited Partnership Units designated as “Class A-1 Limited Partnership Units” pursuant to the New OP Limited Partnership Agreement.
“New OP Class A-1 Percentage” means 90.50%.
“New OP Class A-2 LP Units” means the Class A Limited Partnership Units designated as “Class A-2 Limited Partnership Units” pursuant to the New OP Limited Partnership Agreement.
“New OP Class A-2 Percentage” means 9.50%.
“New OP Class B LP Units” means the Class B Limited Partnership Units of New OP (as defined in the New OP Limited Partnership Agreement).
“New OP Limited Partnership Agreement” means the Second Amended and Restated Limited Partnership Agreement of New OP, to be entered into at the Closing in the form of Exhibit B hereto, by and among CMFT and CIM Group Holdings.
“New OP LP Units” means, as of any given time, the limited partnership units of New OP (including, as of the date hereof, the New OP Class A LP Units and the New OP Class B LP Units).
“Nonparty” has the meaning set forth in Section 6.13.
“Non-CIM Owned Percentage” has the meaning set forth in Section 5.5(b).
A-8
“Opportunity Notice” has the meaning set forth in Section 4.8(a).
“Order” means any administrative decision or award, decree, injunction, judgment, order, quasi-judicial decision or award, ruling or writ of any arbitrator, mediator or Governmental Entity.
“Organizational Documents” means, with respect to any Person, such Person’s certificate of incorporation and by-laws or comparable governing documents.
“Outstanding New OP LP Unit Count” has the meaning set forth in Annex A.
“Party” or “Parties” has the meaning set forth in the Preamble.
“Per Claim Amount” has the meaning set forth in Section 5.2(c).
“Person” means any natural person and any corporation, company, partnership (general or limited), unincorporated association (whether or not having separate legal personality), trust or other entity.
“Post-Closing Matter” has the meaning set forth in Section 6.14(a).
“Post-Closing Representation” has the meaning set forth in Section 6.14(a).
“Pre-Closing Designated Persons” has the meaning set forth in Section 6.14(b).
“Pre-Closing Privileges” has the meaning set forth in Section 6.14(b).
“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and the portion of any Straddle Period ending on the Closing Date.
“Prior Company Counsel” has the meaning set forth in Section 6.14(a).
“Privileged Materials” has the meaning set forth in Section 6.14(c).
“Purchasing Entity” has the meaning set forth in Section 4.12(c).
“Recapitalization” has the meaning set forth in Section 4.7(a).
“Recapitalization Determination Notice” has the meaning set forth in Section 4.7(c).
“Registration Rights Agreement” means the Registration Rights Agreement, to be entered into at the Closing in the form of Exhibit C hereto, by and among CIM Group Holdings and CMFT.
“Regulations” means the Federal Income Tax Regulations, including temporary or proposed regulations, issued under the Code, as amended and as hereafter amended from time to time.
A-9
“REIT” has the meaning set forth in Section 3.14(j).
“REIT Year” has the meaning set forth in Section 3.14(j).
“Representative” of a Person means any officer, director or employee of such Person or any investment banker, attorney, accountant or other advisor, agent or representative of such Person.
“Repurchase Date” has the meaning set forth in Section 4.12(c).
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933.
“Specified Interests” means the interests described in Section 4.13 of the CIM Disclosure Letter.
“Specified Losses” has the meaning set forth in Section 5.2(a)(iii) of the CIM Disclosure Letter.
“Straddle Period” means any taxable period beginning on or before the Closing Date and ending after the Closing Date.
“Strategic Transaction” has the meaning set forth in Section 4.7(c).
“Subsidiary” means, with respect to any Person, any other Person of which at least a majority of the securities or ownership interests having by their terms ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions is directly or indirectly owned or controlled by such Person and/or by one or more of its Subsidiaries. Notwithstanding the foregoing or anything to the contrary in this Agreement, for purposes of any representation made by the CIM Contributor hereunder with respect to “Subsidiaries” of the CIM Contributor or any of the Contributed Entities, or any obligation hereunder of the CIM Contributor to cause any of “Subsidiaries” of the CIM Contributor or any of the Contributed Entities to take (or to refrain from taking) any particular action, no investment fund, managed account, investment account, client account, co-investment vehicle, portfolio investment, portfolio company or other investment client or recipient of investment advisory, sub-advisory, management or other similar services (and no subsidiaries of any of the foregoing Persons) shall be deemed a “Subsidiary” of the CIM Contributor or any of the Contributed Entities.
“Tax” or “Taxes” means any taxes, including federal, state, local and foreign income, profits, franchise, gross receipts, environmental, customs duty, capital stock, severances, stamp, payroll, sales, employment, unemployment, disability, use, property, withholding, excise, production, value-added, occupancy and other taxes, duties or assessments of any nature whatsoever, together with all interest, penalties and additions imposed with respect to such amounts and any interest in respect of such penalties and additions.
A-10
“Tax Receivable Agreement” means the Tax Receivable Agreement, to be entered into at the Closing in the form of Exhibit D hereto, by and among CIM Group Holdings and CMFT.
“Tax Return” means any returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to a Tax authority relating to Taxes.
“Third Party Claim” has the meaning set forth in Section 5.3(b).
“Third Party Claim Expenses” has the meaning set forth in Section 5.3(b)(iv).
“Third Party Investment” has the meaning set forth in Section 4.6.
“Transaction Documents” means this Agreement, the New OP Limited Partnership Agreement, the Registration Rights Agreement, the Tax Receivable Agreement, the Existing OP Limited Partnership Agreement, the CMFT Articles of Amendment, the CMFT Articles Supplementary and the CMFT Bylaws.
“Transactions” means all of the transactions contemplated by this Agreement and the other Transaction Documents.
“Transfer Taxes” has the meaning set forth in Section 4.4(a).
A-11
EXHIBIT B
Form of New OP Limited Partnership Agreement
[Intentionally omitted.]
B-1
EXHIBIT C
Form of Registration Rights Agreement
[Intentionally omitted.]
C-1
EXHIBIT D
Form of Tax Receivable Agreement
[Intentionally omitted.]
D-1
EXHIBIT E
Form of Existing OP Limited Partnership Agreement
[Intentionally omitted.]
E-1
EXHIBIT F
Form of CMFT Articles Supplementary
[Intentionally omitted.]
F-1
EXHIBIT G
Form of CMFT Bylaws
[Intentionally omitted.]
G-1
EXHIBIT H
CMFT Pre-Closing Actions
| 1. | CMFT shall contribute and assign (a) 100% of its general partnership interest in Existing OP to New OP; and (b) 100% of its limited liability company interests in CRI REIT IV, LLC, a Delaware limited liability company and wholly-owned subsidiary of CMFT, to New OP. |
| 2. | CMFT shall assign its right, title and interest in, to and under the Management Agreement to Existing OP. |
| 3. | The CMFT Board shall determine that upon the consummation of the Transactions, CMFT will no longer meet the requirements to qualify as a REIT under Sections 856 through 860 of the Code, and set a Restriction Termination Date (as defined in the Charter) as of a time prior to the Closing, CMFT shall take any further necessary actions pursuant to such determination. |
| 4. | CMFT shall file the CMFT Articles of Amendment followed by the CMFT Articles Supplementary with, and cause each to be accepted for record by, the Department. |
| 5. | CMFT shall cause its Subsidiaries to transfer cash balances to CMFT prior to the Closing in an amount sufficient to pay CMFT’s unpaid dividends and other distributions that CMFT has declared prior to June 30, 2026 (together with any accrued interest and other fees). |
H-1
ANNEX A
Earnout Definitions and Principles
Earnout Definitions:
“Earnout Period” means the period commencing on January 1, 2026 and expiring on the Earnout Period End Date.
“Earnout Period End Date” means December 31, 2028.
“Earnout Statement Deadline” means March 31, 2029.
“Earnout Target” means Fee-Related Revenues in the amount of $1,882,000,000, which is based on years 1-3 of “Gross Revenue from Asset Management Activities” in the Fee-Related Revenues Calculation.
“Fee-Related Revenues” means the Fee-Related Revenues calculated in a manner consistent with the “Gross Revenue from Asset Management Activities” in the Fee-Related Revenues Calculation. For the avoidance of doubt, any item or category of items that was included in “Gross Revenue from Asset Management Activities” for purposes of establishing the Earnout Target constitutes Fee-Related Revenues.
“Outstanding New OP LP Unit Count” means the total New OP LP Units issued and outstanding as of the Closing Date, after giving effect to any and all adjustments effected pursuant to Section 7.9 or 7.10 of the New OP Limited Partnership Agreement (including any adjustment to the New OP Class B LP Units pursuant to Section 7.9(a), Section 7.9(b) or Section 7.10(a) of the New OP Limited Partnership Agreement or any adjustment to the New OP Class A LP Units resulting from the application of the New OP Adjustment Factor (as defined in the New OP Limited Partnership Agreement) or the Adjustment Factor (as defined in the New OP Limited Partnership Agreement) or otherwise (in each case, without duplication)) (calculated on a fully grossed-up basis assuming the issuance of the applicable Earnout Amount was consummated prior to the Closing Date).
Earnout Principles:
Fee-Related Revenues include Management Fees, any acquired revenues that result in fee-related revenues post-acquisition (presented as Management Fees from Redeployment in the Fee-Related Revenues Calculation), Service Fees, Offering Related Fees, Incentive Fees/Allocations, Inv. in Owner Operator – FRE, Reimbursements.
Fee-Related Revenues are net of waivers, offsets, and rebates but not net of Subadvisor Fees, fundraising expenses or other similar costs of investor acquisition that are presented in Asset Management - Expenses in the Fee-Related Revenues Calculation.
Fee-Related Revenues do not include performance fees/allocations (i.e., carried interest) or investment income, which are presented as Performance Allocations, net, and Strategic Holdings, net, respectively, in the Fee-Related Revenues Calculation.
AA-1
For the avoidance of doubt, incentive fees/allocations crystallize on a periodic (e.g., quarterly, annual, etc.) basis typically using book income, and performance fees/allocations (i.e., carried interest) are based on the life of the applicable investment/fund and crystallize on a cash-on-cash basis.
Fee-Related Revenues are presented on a segment reporting basis typical of industry standards at the time of the transaction and consistent with the presentation in the Fee-Related Revenues Calculation.
Fee-Related Revenues from CIM Group Investments, LLC and its Subsidiaries and CMFT and its Subsidiaries will be calculated in a consistent manner as prior to the Closing Date which is consistent with the Fee-Related Revenues Calculation.
New revenue line items (including in respect of new business lines and/or segments) will be calculated and included in Fee-Related Revenues in a manner consistent with the other provisions of these Earnout Definitions and Principles.
AA-2
ANNEX B
Earnout Payment Schedule
| Fee-Related Revenues |
New OP Class A LP Units Issuable as Part of the Earnout Amount | |
| Equal to or greater than 120% of the Earnout Target | 3.75% of the Outstanding New OP LP Unit Count | |
| Equal to at least 110% but less than 120% of the Earnout Target | 3.00% of the Outstanding New OP LP Unit Count | |
| Equal to at least 95% but less than 110% of the Earnout Target | 2.50% of the Outstanding New OP LP Unit Count | |
| Equal to at least 75% but less than 95% of the Earnout Target | 1.25% of the Outstanding New OP LP Unit Count | |
BB-1
Exhibit 10.3
EXECUTION VERSION
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CIM FINANCE HOLDINGS, LP
June 24, 2026
TABLE OF CONTENTS
| Page | ||||||||
| ARTICLE I DEFINED TERMS | 2 | |||||||
| ARTICLE II PARTNERSHIP FORMATION AND IDENTIFICATION | 11 | |||||||
| 2.1 | Formation |
11 | ||||||
| 2.2 | Name, Office and Registered Agent |
11 | ||||||
| 2.3 | Partners |
11 | ||||||
| 2.4 | Term and Dissolution |
11 | ||||||
| 2.5 | Filing of Certificate and Perfection of Limited Partnership |
12 | ||||||
| 2.6 | Certificates Describing Partnership Units |
12 | ||||||
| ARTICLE III BUSINESS OF THE PARTNERSHIP | 12 | |||||||
| ARTICLE IV CAPITAL CONTRIBUTIONS; PARTNERSHIP INTERESTS | 12 | |||||||
| 4.1 | Capital Contributions |
12 | ||||||
| 4.2 | Classes of Partnership Interests. |
13 | ||||||
| 4.3 | Additional Capital Contributions and Issuances of Additional Partnership Interests |
14 | ||||||
| 4.4 | Additional Funding |
16 | ||||||
| 4.5 | Percentage Interests |
16 | ||||||
| 4.6 | Return of Capital Contributions |
16 | ||||||
| 4.7 | No Third-Party Beneficiary |
16 | ||||||
| 4.8 | Preemptive Rights. |
16 | ||||||
| ARTICLE V DISTRIBUTIONS | 18 | |||||||
| 5.1 | Distributions |
18 | ||||||
| 5.2 | Limitations on Return of Capital Contributions |
19 | ||||||
| 5.3 | Distributions Upon Liquidation |
20 | ||||||
| ARTICLE VI CAPITAL ACCOUNTS; ALLOCATIONS | 20 | |||||||
| 6.1 | Capital Accounts |
20 | ||||||
| 6.2 | No Deficit Make Up |
20 | ||||||
| 6.3 | Allocation of Profits and Losses |
20 | ||||||
| ARTICLE VII RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER | 23 | |||||||
| 7.1 | Management of the Partnership |
23 | ||||||
| 7.2 | Delegation of Authority |
26 | ||||||
| 7.3 | Indemnification and Exculpation of Indemnitees |
26 | ||||||
| 7.4 | Liability of the General Partner and Its Affiliates |
27 | ||||||
| 7.5 | Reimbursement of General Partner |
29 | ||||||
| 7.6 | Outside Activities |
29 | ||||||
| 7.7 | Consent Rights |
29 | ||||||
| 7.8 | Title to Partnership Assets |
29 | ||||||
| 7.9 | CMFT Capital Events |
30 | ||||||
| 7.10 | One-to-One Ratio Maintenance Provisions |
31 | ||||||
| ARTICLE VIII CHANGES IN GENERAL PARTNER | 31 | |||||||
| 8.1 | Transfer of the General Partner’s Partnership Interest |
31 | ||||||
| 8.2 | Admission of a Substitute or Additional General Partner |
31 | ||||||
| ARTICLE IX RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS | 32 | |||||||
| 9.1 | Management of the Partnership |
32 | ||||||
| 9.2 | Power of Attorney |
32 | ||||||
| 9.3 | Limitation on Liability of Limited Partners |
32 | ||||||
| 9.4 | Exchange Right |
32 | ||||||
| 9.5 | Duties and Conflicts |
34 | ||||||
| ARTICLE X TRANSFERS OF LIMITED PARTNERSHIP INTERESTS | 34 | |||||||
| 10.1 | Purchase for Investment |
34 | ||||||
| 10.2 | Restrictions on Transfer of Limited Partnership Interests |
34 | ||||||
| 10.3 | Admission of Substitute Limited Partner |
36 | ||||||
| 10.4 | Rights of Assignees of Partnership Interests |
37 | ||||||
| 10.5 | Effect of Bankruptcy, Death, Incompetence or Termination of a Limited Partner |
37 | ||||||
| 10.6 | Joint Ownership of Interests |
37 | ||||||
| ARTICLE XI BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS | 38 | |||||||
| 11.1 | Books and Records |
38 | ||||||
| 11.2 | Custody of Partnership Funds; Bank Accounts |
38 | ||||||
| 11.3 | Fiscal and Taxable Year |
38 | ||||||
| 11.4 | Annual Tax Information and Report |
38 | ||||||
| 11.5 | Tax Matters; Tax Elections; Special Basis Adjustments |
38 | ||||||
| 11.6 | Reports to Limited Partners |
39 | ||||||
| ARTICLE XII AMENDMENT OF AGREEMENT; MEETINGS | 40 | |||||||
| 12.1 | Amendment |
40 | ||||||
| 12.2 | Meetings of Partners |
40 | ||||||
| ARTICLE XIII MERGER, EXCHANGE OR CONVERSION | 42 | |||||||
| 13.1 | Merger, Exchange or Conversion of Partnership |
42 | ||||||
| 13.2 | Approval of Plan of Merger, Exchange or Conversion |
42 | ||||||
| 13.3 | Rights of Dissenting Limited Partners |
44 | ||||||
| ARTICLE XIV GENERAL PROVISIONS |
45 | |||||||
| 14.1 | Notices |
45 | ||||||
| 14.2 | Survival of Rights |
45 | ||||||
| 14.3 | Additional Documents |
45 | ||||||
| 14.4 | Severability |
45 | ||||||
| 14.5 | Entire Agreement |
45 | ||||||
| 14.6 | Pronouns and Plurals |
46 | ||||||
| 14.7 | Headings |
46 | ||||||
| 14.8 | Counterparts |
46 | ||||||
| 14.9 | Governing Law |
46 | ||||||
| 14.10 | Arbitration |
46 | ||||||
| 14.11 | Acknowledgement as to Exculpation and Indemnification |
47 | ||||||
-ii-
| EXHIBIT A | – | Partners and Partnership Units | ||
| EXHIBIT B | – | Notice of Exercise of Exchange Right | ||
| EXHIBIT C | – | Consent Rights | ||
| EXHIBIT D | – | Definition of “Adjustment Factor” and Illustrative Calculations | ||
-iii-
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CIM FINANCE HOLDINGS, LP
This Second Amended and Restated Agreement of Limited Partnership is effective as of the 24th day of June, 2026, by and among CIM Real Estate Finance Trust, Inc., a Maryland corporation (“CMFT”), CIM Finance Holdings GP, LLC, a Delaware limited liability company and a direct and wholly owned Subsidiary of CMFT (the “CMFT General Partner”), CIM Group Holdings, LLC, a Delaware limited liability company (“CIM Group Holdings” or the “CIM Limited Partner”), and the other Limited Partner(s) set forth or which may, in the future, be set forth on Exhibit A hereto, as amended from time to time, with respect to CIM Finance Holdings, LP, a limited partnership formed under the laws of the State of Delaware (the “Partnership”), pursuant to a Certificate of Limited Partnership filed with the Office of the Secretary of State of the State of Delaware on May 8, 2026.
RECITALS
WHEREAS, the parties hereto desire to enter into this Agreement in order to set forth the terms and conditions under which the Partnership will be operated as well as the rights, obligations, and limitations of the General Partner and the Limited Partners with respect to each other and the Partnership as a whole;
WHEREAS, concurrently with the execution of this Agreement, CIM Group Holdings entered into that certain Contribution and Subscription Agreement, dated as of June 24, 2026 (the “Contribution Agreement”), by and among the Partnership, CMFT, and CIM Group Holdings, pursuant to which CIM Group Holdings contributed to the Partnership all of its right, title and interest in CIM Group Management, LLC, a Delaware limited liability company (“CIM Group Management”), and all of its right, title and interest in CIM Group Investments, LLC, a Delaware limited liability company (“CIM Group Investments” and, together with CIM Group Management, the “CIM Group Entities”), and such other consideration as described in the Contribution Agreement, and in exchange therefor, CIM Group Holdings was admitted as a Limited Partner and received shares of Special Voting Preferred Stock, $0.01 par value per share, of CMFT (“CMFT Voting Preferred Shares”) and Class A Limited Partnership Units on the terms and subject to the conditions set forth in the Contribution Agreement;
WHEREAS, prior to the execution of this Agreement, CMFT contributed to the Partnership all of its right, title and interest in CIM Real Estate Finance Operating Partnership, LP (the “Existing OP”) and in exchange therefor, CMFT received a Limited Partnership Interest;
WHEREAS, prior to the execution of this Agreement, CMFT contributed to the Partnership all of its right, title and interest in CRI REIT IV, LLC and in exchange therefor, CMFT received certain good and valuable consideration;
WHEREAS, it is contemplated that as a result of the transaction contemplated in the Contribution Agreement and this Agreement and with the approval of the Board of Directors of CMFT as permitted under its Charter, CMFT will cease to meet the requirements for qualification as a real estate investment trust for U.S. federal income tax purposes (the “De-REIT”), and will terminate its status as a REIT effective for the 2026 taxable year; and
WHEREAS, this Agreement amends, restates and supersedes that certain Amended and Restated Agreement of Limited Partnership, by and among CMFT and the CMFT General Partner, dated as of June 24, 2026;
NOW, THEREFORE, in consideration of the foregoing, of the mutual covenants between the parties to this Agreement, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties agree as follows:
AGREEMENT
ARTICLE I
DEFINED TERMS
The following defined terms used in this Agreement shall have the meanings specified below:
“AAA” has the meaning set forth in Section 14.10 hereof.
“Act” means the Delaware Revised Uniform Limited Partnership Act, as it may be amended from time to time.
“Additional Funds” has the meaning set forth in Section 4.4 hereof.
“Additional Limited Partner” means a Person admitted to the Partnership as a Limited Partner pursuant to Section 4.3 hereof and who is shown as such on the books and records of the Partnership.
“Additional Securities” has the meaning set forth in Section 4.3(b) hereof.
“Adjusted CMFT Common Share Unit Count” has the meaning set forth in Section 7.9(b) hereof.
“Adjustment Factor” has the meaning set forth on Exhibit D.
“Affiliate” means, with respect to any Person, (i) any Person directly or indirectly controlling, controlled by or under common control with such Person; (ii) any executive officer, director, trustee or general partner of such Person; and (iii) any legal entity for which such Person acts as an executive officer, director, trustee or general partner.
“Agreed Value” means (i) the fair market value of a Partner’s non-cash Capital Contribution as of the date of contribution as agreed to by such Partner and the General Partner as of the date of contribution, as it may be amended from time to time, or (ii) in the case of any contribution or distribution of property other than cash, the fair market value of such property as determined by the General Partner at the time such property is contributed or distributed, reduced by liabilities either assumed by the Partnership or such Partner upon such contribution or distribution or to which such property is subject when the property is contributed or distributed.
-2-
“Agreement” means this Second Amended and Restated Agreement of Limited Partnership, as it may be further amended or restated from time to time.
“Articles Supplementary” means the instrument classifying, designating and setting the terms of the CMFT Voting Preferred Shares.
“Assumed Tax Liability” means, with respect to any Partner for a taxable year, an amount equal to the excess of (a) the product of (i) the Assumed Tax Rate multiplied by (ii) the estimated or actual cumulative amount of net taxable income and gain of the Partnership, as determined for federal income tax purposes, multiplied by (iii) such Partner’s Percentage Interest over (b) the sum of the cumulative Tax Distributions previously made to such Partner with respect to such taxable year; provided that such Assumed Tax Liability shall be computed without regard to any increases to the tax basis of the Partnership’s property pursuant to Sections 734(b) or 743(b) of the Code; provided further that, in the case of each Partner, and for the avoidance of doubt, such Assumed Tax Liability shall be determined without regard to any Code Section 704(c) allocations (including “reverse” Code Section 704(c) allocations) to the Partner. For the avoidance of doubt, in the event that the Assumed Tax Rate changes, the product described above shall be computed using the Assumed Tax Rate applicable to each full or partial taxable year, as applicable, multiplied by the net taxable income for such full or partial taxable year (taking into account the character of such net taxable income and taking into account losses in the full or partial taxable year in which such losses are deemed to be utilized pursuant to clause (a)(ii) of this definition) and by such Partner’s Percentage Interest for the relevant period and all references to a Partner shall include all predecessors of such Partner.
“Assumed Tax Rate” means the highest effective marginal combined federal, state and local income tax rate for a taxable year applicable to a corporation or individual resident in Los Angeles, California or New York, New York (whichever is higher), taking into account (i) the character of the relevant tax items (including ordinary or capital), (ii) the deductibility of state and local income taxes for federal income tax purposes (but only to the extent such taxes are deductible under the Code) and (iii) any surtax or excise tax on income (including, for the avoidance of doubt, the Medicare surtax on certain net investment income), as reasonably determined by the General Partner. For the avoidance of doubt, the Assumed Tax Rate shall be the same for all Partners.
“Available Cash” means, as of any given date, all cash and cash equivalents of the Partnership on hand (other than amounts designated for specific purposes), less amounts needed to pay or provide for the Partnership’s expenses, liabilities and obligations (including Tax Distributions and any other obligations set forth herein), and to maintain reasonable reserves for working capital, contingencies or other anticipated obligations, in each case as determined by the General Partner in its reasonable discretion, and excluding any amounts that are otherwise restricted or not available for distribution.
“Book Value” means, with respect to any property of the Partnership, the Partnership’s adjusted basis for U.S. federal income tax purposes, adjusted from time to time to reflect the adjustments required or permitted by Regulations Sections 1.704-1(b)(2)(iv)(d)-(g).
-3-
“Business Day” means any day other than (i) a Saturday or a Sunday or (ii) a day on which banks in New York, New York, USA are authorized or required by law to be closed.
“Capital Account” means the capital account maintained for a Partner in accordance with Section 6.1 hereof.
“Capital Contribution” means the total amount of cash, cash equivalents and the Agreed Value of any Property or other asset contributed or agreed to be contributed, as the context requires, to the Partnership by each Partner pursuant to the terms of the Agreement. Any reference to the Capital Contribution of a Partner shall include the Capital Contribution made by a predecessor holder of the Partnership Units of such Partner.
“Cash Amount” means an amount of cash equal to the Value of the CMFT Common Shares Amount that the Exchanging Partner would otherwise be entitled to receive in respect of the Partnership Units offered for exchange by such Exchanging Partner (calculated on the date of receipt by CMFT of an Exchange Notice).
“Certificate” means the Partnership’s Certificate of Limited Partnership, as originally filed with the Office of the Secretary of State of the State of Delaware and as amended from time to time.
“Charter” means the Articles of Incorporation of CMFT and all amendments and supplements thereto, including the Articles Supplementary, as from time to time filed with and accepted for record by the State Department of Assessments and Taxation of the State of Maryland.
“CIM Group Entities” has the meaning set forth in the Recitals hereof.
“CIM Group Investments” has the meaning set forth in the Recitals hereof.
“CIM Group Management” has the meaning set forth in the Recitals hereof.
“CIM Group Holdings” has the meaning set forth in the Preamble hereof.
“CIM Limited Partner” has the meaning set forth in the Preamble hereof.
“Class” means, when used with reference to a Partnership Interest, the class of Partnership Interests of which such Partnership Interest is a part.
“Class A Limited Partnership Interest” has the meaning set forth in Section 4.2(b) hereof.
“Class A Limited Partnership Units” means the Partnership Units comprising the Class A Limited Partnership Interests.
“Class A Series” has the meaning set forth in Section 4.2(b).
“Class B Limited Partnership Interest” has the meaning set forth in Section 4.2(c) hereof.
“Class B Limited Partnership Units” means the Partnership Units comprising the Class B Limited Partnership Interests.
-4-
“CMFT” has the meaning set forth in the Preamble hereof.
“CMFT Capital Event” has the meaning set forth in Section 7.9(a) hereof.
“CMFT Capital Stock” means the capital stock of CMFT.
“CMFT Common Share” means a share of common stock, $0.01 par value per share, of CMFT (or its successor, as the case may be).
“CMFT Common Shares Amount” means a number of CMFT Common Shares equal to the product of the number of Class A Limited Partnership Units offered for exchange by an Exchanging Partner, multiplied by the Conversion Factor.
“CMFT General Partner” has the meaning set forth in the Preamble hereof.
“CMFT Voting Preferred Shares” has the meaning set forth in the Recitals hereof.
“CMFT Voting Preferred Share Votes” has the meaning set forth in Section 4.2(b).
“Code” means the Internal Revenue Code of 1986, as amended, and as hereafter amended from time to time.
“Commission” means the U.S. Securities and Exchange Commission.
“Competent Independent Expert” shall mean a Person with no material current or prior business or personal relationship with the General Partner or the Partnership who is substantially engaged in the business of rendering valuation opinions. Membership in a nationally recognized appraisal society such as the American Institute of Real Estate Appraisers or the Society of Real Estate Appraisers shall be conclusive evidence of such qualification.
“Consent Rights Expiration Time” means such time as (a) the CIM Limited Partner and its Permitted Transferees collectively hold less than ten percent (10%) of the Partnership Units that are issued and outstanding as of the date hereof (as appropriately adjusted hereafter to give effect to any unit split, reverse split, combination, reclassification, recapitalization or similar transaction) and (b) the CMFT Common Shares are listed on a national securities exchange registered under Section 6 of the Exchange Act.
“Contributed Percentage” means, with respect to any issuance of CMFT Common Shares or other shares of CMFT Capital Stock, the portion of the proceeds from such issuance (minus any underwriter’s discount or other fees or expenses paid or incurred in connection with such issuance) actually contributed by CMFT to the Partnership measured as a percentage of the aggregate proceeds of such issuance (minus any underwriter’s discount or other fees or expenses paid or incurred in connection with such issuance).
“Contributed Property” means each item of Property or other asset, in such form as may be permitted by the Act, but excluding cash, contributed, deemed to be contributed or agreed to be contributed, as the context requires to the Partnership, net of any liabilities assumed by the Partnership relating to such Contributed Property and any liabilities to which such Contributed Property is subject.
-5-
“Contribution Agreement” has the meaning set forth in the Recitals hereof.
“Conversion Factor” means the ratio at which Partnership Units are convertible into CMFT Common Shares pursuant to Section 9.4, which is 1.0.
“Corresponding Partnership Units” means, with respect to any shares of CMFT Capital Stock, any Limited Partnership Units issuable on a one-to-one basis with such shares by the express terms of this Agreement (or any subsequent amendment thereof). For example, the Class A Limited Partnership Units are the Corresponding Partnership Units of the CMFT Voting Preferred Shares, and the Class B Limited Partnership Units are the Corresponding Partnership Units of the CMFT Common Shares.
“Defaulting Limited Partner” has the meaning set forth in Section 5.1(c) hereof.
“Demand Notice” has the meaning set forth in Section 14.10(a) hereof.
“Depreciation” means, for each taxable year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to property for such taxable year, except that if the Book Value of an asset differs from its adjusted tax basis for U.S. federal income tax purposes at the beginning of such taxable year, Depreciation shall be an amount that bears the same ratio to such beginning Book Value as the U.S. federal income tax depreciation, amortization, or other cost recovery deduction for such taxable year bears to such beginning adjusted tax basis; provided, however, that if the adjusted tax basis for U.S. federal income tax purposes of property of the Partnership at the beginning of such taxable year is zero, Depreciation shall be determined with reference to such beginning Book Value using any reasonable method selected by the General Partner.
“De-REIT” has the meaning set forth in the Recitals hereof.
“Dissenting Limited Partner” has the meaning provided in Section 13.3(a) hereof.
“Event of Bankruptcy” as to any Person means (i) the filing of a petition for relief as to such Person as debtor or bankrupt under the Bankruptcy Code of 1978 or similar provision of law of any jurisdiction (except if such petition is contested by such Person and has been dismissed within ninety (90) days); (ii) the insolvency or bankruptcy of such Person as finally determined by a court proceeding; (iii) the filing by such Person of a petition or application to accomplish the same or for the appointment of a receiver or a trustee for such Person or a substantial part of its assets; and (iv) the commencement of any proceedings relating to such Person as a debtor under any other reorganization, arrangement, insolvency, adjustment of debt or liquidation law of any jurisdiction, whether now in existence or hereinafter in effect, either by such Person or by another, provided that if such proceeding is commenced by another, such Person indicates its approval of such proceeding, consents thereto or acquiesces therein, or such proceeding is contested by such Person and has not been finally dismissed within ninety (90) days.
-6-
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and as hereafter amended from time to time.
“Exchange Notice” means a Notice of Exercise of Exchange Right, substantially in the form of Exhibit B hereto.
“Exchange Right” has the meaning provided in Section 9.4(a) hereof.
“Exchanging Partner” has the meaning provided in Section 9.4(a) hereof.
“Existing OP” has the meaning set forth in the Recitals hereof.
“General Partner” means the CMFT General Partner, and any Person who becomes a substitute or additional General Partner as provided herein, and any successors thereto.
“General Partner Loan” has the meaning set forth in Section 5.1(c) hereof.
“General Partnership Interest” means a Partnership Interest held by the General Partner that is a general partnership interest.
“Indemnitee” means (i) any Person made a party to a proceeding by reason of its status as the General Partner or the parent of the General Partner (including CMFT) or a director, officer, manager, or employee of the General Partner, CMFT or the Partnership, and (ii) such other Persons (including Affiliates of CMFT, the General Partner or the Partnership) as the General Partner may designate.
“Limited Partner” means the CIM Limited Partner, CMFT, any Person named as a Limited Partner on Exhibit A attached hereto, and any Person who becomes a Substitute Limited Partner or Additional Limited Partner in such Person’s capacity as a Limited Partner in the Partnership.
“Limited Partnership Interest” means the ownership interest of a Limited Partner in the Partnership at any particular time, including the right of such Limited Partner to any and all benefits to which such Limited Partner may be entitled as provided in this Agreement and in the Act, together with the obligations of such Limited Partner to comply with all the provisions of this Agreement and of such Act.
“Limited Partnership Unit” means a fractional, undivided share of the Limited Partnership Interests of all Limited Partners issued hereunder.
“Liquidating Events” has the meaning set forth in Section 2.4(a) hereof.
“New OP Adjustment Factor” has the meaning set forth in Section 7.9(b) hereof.
“New OP Capital Event” has the meaning set forth in Section 7.9(b) hereof.
“Participating Buyer” has the meaning set forth in Section 4.8(b) hereof.
“Participation Commitment” has the meaning set forth in Section 4.8(b) hereof.
-7-
“Participation Notice” has the meaning set forth in Section 4.8(a) hereof.
“Participation Offer Period” has the meaning set forth in Section 4.8(b) hereof.
“Partner” means any General Partner or Limited Partner.
“Partnership” has the meaning set forth in the Preamble hereof.
“Partnership Interest” means an ownership interest in the Partnership held by either a Limited Partner or the General Partner and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement.
“Partnership Loan” has the meaning set forth in Section 5.1(c) hereof.
“Partnership Representative” has the meaning set forth in Section 11.5(a).
“Partnership Unit” means a fractional, undivided share of the Partnership Interests of all Partners issued hereunder.
“Percentage Interest” means the percentage ownership interest in the Partnership of each Limited Partner, as determined by dividing the number of Partnership Units owned by a Limited Partner by the aggregate number of Partnership Units owned by all Partners (excluding any Partnership Units owned by the General Partner that comprise the General Partnership Interest).
“Permitted Merger” has the meaning set forth in Section 9.4(b) hereof.
“Permitted Transferee” has the meaning set forth in Section 10.2(b) hereof.
“Person” means any individual, partnership, corporation, joint venture, limited liability company, trust or other entity.
“Profits” and “Losses” mean, for each taxable year or other period, an amount equal to the net income or loss for such taxable year or other period of the Partnership, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), adjusted in accordance with the following adjustments (without duplication), but without taking into account items specially allocated pursuant to Section 6.3(b):
(i) Exempt Income. Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Profits and Losses shall be added to such taxable income or loss.
(ii) Certain Expenditures. Any expenditures of the Partnership described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits and Losses, shall be subtracted from such taxable income or loss.
-8-
(iii) Adjustment of Book Value. If the Book Value of any Partnership property is adjusted pursuant to Regulations Sections 1.704-1(b)(2)(iv)(d)-(g), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property for purposes of computing Profits and Losses.
(iv) Sales of Property. Items of income, gain, loss or deduction resulting from any disposition of all or any part of the Partnership’s or any of its Subsidiaries’ property, with respect to which gain or loss is recognized for U.S. federal income tax purposes, shall be determined by reference to the Book Value of the property disposed of, notwithstanding that the property’s adjusted tax basis may differ from such Book Value.
(v) Depreciation. In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such taxable year or other period as determined in accordance with this Agreement.
(vi) Adjustments Under Sections 734 and 743 of the Code. To the extent an adjustment to the adjusted tax basis of any Partnership property pursuant to Section 734(b) or Section 743(b) of the Code is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Partner’s Interest in the Partnership, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the property) or loss (if the adjustment decreases such basis) from the disposition of the property and shall be taken into account for purposes of computing Profits and Losses.
“Property” means any real property in which the Partnership holds an ownership interest, either directly or pursuant to the Partnership’s ownership of an interest in a subsidiary that owns an interest in any such real property.
“Prospective Issuance” shall mean any issuance or sale of any Partnership Units or other equity securities of the Partnership or any Subsidiary of the Partnership (collectively, “Subject Securities”) for cash, securities or other property, other than any issuance or sale of Partnership Units pursuant to Section 4.3(a)(i)(1) or Section 4.3(a)(i)(2).
“Prospective Subscriber” has the meaning set forth in Section 4.8 hereof.
“Regulations” means the Federal Income Tax Regulations, including temporary or proposed regulations, issued under the Code, as amended and as hereafter amended from time to time.
“REIT” means a real estate investment trust within the meaning of Section 856 of the Code.
“Remaining Securities” has the meaning set forth in Section 4.8(b) hereof.
“Requesting Party” has the meaning set forth in Section 14.10(a) hereof.
“Restricted Entities” has the meaning set forth in Section 7.7 hereof.
“Securities Act” means the Securities Act of 1933, as amended, and as hereafter amended from time to time.
-9-
“Specified Exchange Date” means the first Business Day of the month first occurring after the expiration of sixty (60) Business Days from the date of receipt by CMFT of the Exchange Notice.
“Specified Family and Trust Persons” has the meaning set forth in Section 10.2(b) hereof.
“Subject Securities” has the meaning set forth in the definition of “Prospective Issuance”.
“Subsidiary” means, with respect to any Person, any corporation or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person.
“Substitute Limited Partner” means any Person admitted to the Partnership as a Limited Partner pursuant to Section 10.3.
“Tax Distributions” has the meaning set forth in Section 5.1(b).
“Tax Receivable Agreement” means that certain Tax Receivable Agreement, dated as of June 24, 2026, by and among CMFT, the other parties to this Agreement and the other Persons who are parties thereto, as it may be amended or restated from time to time.
“Transfer” has the meaning set forth in Section 10.2(a).
“Value” means, with respect to any security, the average of the daily market price of such security for the ten (10) consecutive trading days immediately preceding the date as of which such Value is to be determined. The market price for each such trading day shall be: (i) if the security is listed or admitted to trading on any securities exchange, the sale price, regular way, on such day, or if no such sale takes place on such day, the average of the closing bid and asked prices, regular way, on such day; (ii) if the security is not listed or admitted to trading on any securities exchange, the last reported sale price on such day or, if no sale takes place on such day, the average of the closing bid and asked prices on such day, as reported by a reliable quotation source designated by the General Partner; or (iii) if the security is not listed or admitted to trading on any securities exchange and no such last reported sale price or closing bid and asked prices are available, the average of the reported high bid and low asked prices on such day, as reported by a reliable quotation source designated by the General Partner, or if there shall be no bid and asked prices on such day, the average of the high bid and low asked prices, as so reported, on the most recent day (not more than ten (10) days prior to the date in question) for which prices have been so reported; provided, that if there are no bid and asked prices reported during the ten (10) days prior to the date in question, the value of the security shall be determined by the General Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate. In the event the security includes any additional rights, then the value of such rights shall be determined by the General Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate.
-10-
ARTICLE II
PARTNERSHIP FORMATION AND IDENTIFICATION
2.1 Formation. The Partnership is a limited partnership formed pursuant to the Act and upon the terms and conditions set forth in this Agreement.
2.2 Name, Office and Registered Agent. The name of the Partnership is “CIM Finance Holdings, LP”. The principal place of business of the Partnership shall be 2398 East Camelback Road, 4th Floor, Phoenix, Arizona 85016. The General Partner may at any time change the location of such office, provided the General Partner gives notice to the Partners of any such change. The name and address of the Partnership’s registered agent is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The registered agent’s sole duty shall be to forward to the Partnership any notice that is served on it as registered agent.
2.3 Partners.
(a) The general partner of the Partnership is CIM Finance Holdings GP, LLC, a Delaware limited liability company. Its principal place of business is the same as that of the Partnership.
(b) The limited partners are those Persons identified as Limited Partners (including the CIM Limited Partner) on Exhibit A hereto, as it may be amended from time to time.
2.4 Term and Dissolution.
(a) The Partnership shall have perpetual duration, except that the Partnership shall be dissolved earlier upon the first to occur of any of the following events, subject, in each case, to the receipt of the prior written consent of Limited Partners holding more than 50% of the then issued and outstanding Class A Limited Partnership Units as contemplated in Section 7.7 (“Liquidating Events”):
(i) the occurrence of an Event of Bankruptcy as to a General Partner or the dissolution, death, removal or withdrawal of a General Partner unless the business of the Partnership is continued, provided, that if a General Partner is on the date of such occurrence a partnership, the dissolution of such General Partner as a result of the dissolution, death, withdrawal, removal or Event of Bankruptcy of a partner in such partnership shall not be an event of dissolution of the Partnership if the business of such General Partner is continued by the remaining partner or partners thereof, either alone or with additional partners, and such General Partner and such partners comply with any other applicable requirements of this Agreement;
(ii) the passage of ninety (90) days after the sale or other disposition of all or substantially all of the assets of the Partnership (provided, that if the Partnership receives an installment obligation as consideration for such sale or other disposition, the Partnership shall continue, unless sooner dissolved under the provisions of this Agreement, until such time as such obligation is paid in full);
(iii) the exchange of all Limited Partnership Interests held by CMFT or any Subsidiary of CMFT; or
(iv) the election by the General Partner that the Partnership should be dissolved.
-11-
(b) Upon dissolution of the Partnership (unless the business of the Partnership is continued), the General Partner (or its trustee, receiver, successor or legal representative) shall amend or cancel the Certificate and liquidate the Partnership’s assets and apply and distribute the proceeds thereof in accordance with Section 5.3. Notwithstanding the foregoing, the liquidating General Partner may either (i) defer liquidation of, or withhold from distribution for a reasonable time, any assets of the Partnership (including those necessary to satisfy the Partnership’s debts and obligations), or (ii) distribute the assets to the Partners in kind.
2.5 Filing of Certificate and Perfection of Limited Partnership. The General Partner shall execute, acknowledge, record and file, at the expense of the Partnership, the Certificate and any and all amendments thereto and all requisite fictitious name statements and notices in such places and jurisdictions as may be necessary to cause the Partnership to be treated as a limited partnership under, and otherwise to comply with, the laws of each state or other jurisdiction in which the Partnership conducts business.
2.6 Certificates Describing Partnership Units. At the request of a Limited Partner, the General Partner may, at its option and in its discretion, issue a certificate summarizing the terms of such Limited Partner’s interest in the Partnership, including the number of Partnership Units owned as of the date of such certificate. If issued, any such certificates (a) shall be in form and substance as approved by the General Partner, (b) shall not be negotiable, and (c) shall bear a legend substantially similar to the following:
“This certificate is not negotiable. The Partnership Units represented by this certificate are governed by and transferable only in accordance with the provisions of the Second Amended and Restated Agreement of Limited Partnership of CIM Finance Holdings, LP, as amended from time to time.”
ARTICLE III
BUSINESS OF THE PARTNERSHIP
The purpose and nature of the business to be conducted by the Partnership is to conduct any business, enterprise or activity that may be lawfully conducted by a limited partnership organized pursuant to the Act.
ARTICLE IV
CAPITAL CONTRIBUTIONS; PARTNERSHIP INTERESTS
4.1 Capital Contributions. The CMFT General Partner, CMFT and the CIM Limited Partner have each made Capital Contributions to the Partnership in exchange for the Partnership Units. The Partners acknowledge and agree that, immediately prior to the admission of the CIM Limited Partner, the Partnership was treated as an entity disregarded as separate from its owner for U.S. federal income tax purposes. The Partners further acknowledge and intend that the admission of the CIM Limited Partner and its related Capital Contribution be treated for U.S. federal income tax purposes in accordance with Situation 2 of Revenue Ruling 99-5, 1999-1 C.B. 434, such that (i) CMFT shall be treated as contributing all of the assets and liabilities of the Existing OP to a newly formed partnership in exchange for a partnership interest therein, and (ii) the CIM Limited Partner shall be treated as contributing the CIM Group Entities to such partnership in exchange for a partnership interest therein. The Partners shall report these transactions consistently with such treatment unless otherwise required by applicable law. The Partnership and each Partner shall prepare and file all tax returns and information returns, and shall take all reporting positions, in a
-12-
manner consistent with the treatment described above, including the application of Sections 721, 722, 723 and 752 of the Code, unless a contrary position is required by a final determination or applicable law. Exhibit A shall be deemed automatically amended upon, and the General Partner may, without the approval of any other Partner, attach an amended Exhibit A to this Agreement to reflect: (a) the issuance of Partnership Units to Additional Limited Partners or to any existing Limited Partner pursuant to Section 4.3, (b) any Partnership Units purchased or redeemed pursuant to Section 7.9 or (c) any redemption or purchase of Partnership Units by the Partnership, CMFT or the General Partner by reason of the exercise by a Limited Partner of the Exchange Right (such issuances, redemptions or purchases being subject to the requirements of Section 7.7, as applicable).
4.2 Classes of Partnership Interests.
There shall be multiple Classes of Partnership Interests, which shall initially consist of the following:
(a) General Partnership Interests. Each General Partnership Interest shall represent a Partnership Interest that is not a Limited Partnership Interest and shall be entitled to the rights of a General Partnership Interest as set forth in this Agreement. The General Partnership Interest will at all times be, in the aggregate, at least 0.01% of the Partnership Units.
(b) Class A Limited Partnership Interests. Each “Class A Limited Partnership Interest” shall represent a Limited Partnership Interest and shall be entitled to the rights of a Class A Limited Partnership Interest and a Limited Partnership Interest as set forth in this Agreement. Notwithstanding anything to the contrary herein, the Partners acknowledge and agree that the Class A Limited Partnership Units shall only be issued to the Limited Partners (other than CMFT) and only on a one-to-one basis with the number of votes that the CMFT Voting Preferred Shares issued by CMFT entitle the holders thereof to cast with respect to any matter as to which the holders of CMFT Voting Preferred Shares are entitled to cast votes under the Charter and applicable law (such number of votes that such holders are entitled to cast, the “CMFT Voting Preferred Share Votes”) such that, as of any given time, the number of issued and outstanding Class A Limited Partnership Units shall be the same as the number of CMFT Voting Preferred Share Votes represented by the then issued and outstanding CMFT Voting Preferred Shares. The Class A Limited Partnership Units and CMFT Voting Preferred Shares shall be held together by the same Partners and without disproportionate Transfers of such Class A Limited Partnership Units and CMFT Voting Preferred Shares which may cause the number of such Partner’s holdings of Class A Limited Partnership Units and CMFT Voting Preferred Share Votes to be different. In furtherance of the foregoing, and notwithstanding any other provision of this Agreement, in the event that any Partner is permitted or required hereunder to Transfer any of its Class A Limited Partnership Units, such Partner shall simultaneously Transfer to the same transferee a number of CMFT Voting Preferred Shares representing an equivalent number of CMFT Voting Preferred Share Votes. The Class A Limited Partnership Units shall be designated as either “Class A-1 Limited Partnership Units” or “Class A-2 Limited Partnership Units” (each, a “Class A Series”), but shall otherwise have identical rights, entitlements and interests.
-13-
(c) Class B Limited Partnership Interests. Each Limited Partnership Interest issued and outstanding immediately prior to the execution of this Agreement is hereby reclassified as “Class B Limited Partnership Interests.” Each “Class B Limited Partnership Interest” shall represent a Limited Partnership Interest and shall be entitled to the rights of a Limited Partnership Interest as set forth in this Agreement. Notwithstanding anything to the contrary herein, the Partners acknowledge and agree that following such reclassification, the Class B Limited Partnership Units shall thereafter only be issued to CMFT and to no other Person, and only on a one-to-one basis with each CMFT Common Share issued by CMFT such that, as of any given time, the number of issued and outstanding Class B Limited Partnership Units shall be the same as the number of issued and outstanding CMFT Common Shares.
4.3 Additional Capital Contributions and Issuances of Additional Partnership Interests. Except as provided in this Section 4.3 or in Section 4.4, the Partners shall have no right or obligation to make any additional Capital Contributions or loans to the Partnership. The General Partner and CMFT may contribute additional capital to the Partnership, from time to time, and receive additional Partnership Units in respect thereof in the manner contemplated by this Section 4.3, subject to Section 7.7.
(a) Issuances of Additional Interests.
(i) General. The General Partner is hereby authorized to cause the Partnership to issue additional Partnership Interests in the form of Partnership Units for any Partnership purpose, at any time or from time to time, to the Limited Partners or to other Persons (other than (A) the General Partner and (B) CMFT except as provided for pursuant to the last sentence of this Section 4.3(a)(i)) for such consideration and on such terms and conditions as shall be established by the General Partner, subject to Section 4.2(b), Section 4.8 and Section 7.7. Any additional Partnership Interests issued pursuant to this Section 4.3(a)(i) may be issued in one or more classes, or one or more series of any of such classes, with such designations, preferences and relative participating, optional or other special rights, powers and duties, including rights, powers and duties senior to Limited Partnership Interests, all as shall be determined by the General Partner, subject to Section 4.2(b), Section 7.7 and Delaware law, including, without limitation, (A) the allocations of items of Partnership income, gain, loss, deduction and credit to each such class or series of Partnership Interests; (B) the right of each such class or series of Partnership Interests to share in Partnership distributions; and (C) the rights of each such class or series of Partnership Interests upon dissolution and liquidation of the Partnership. Notwithstanding the foregoing provisions of this Section 4.3(a)(i), no additional Partnership Interests shall be issued to the General Partner. Furthermore, and notwithstanding the foregoing provisions of this Section 4.3(a)(i), no additional Partnership Interests shall be issued to CMFT unless:
(1) additional Partnership Interests are not Class A Limited Partnership Interests or Class B Limited Partnership Interests and are issued to all Partners in proportion to their respective Percentage Interests;
(2) issuances of Class B Limited Partnership Units in connection with an exchange or redemption made pursuant to Section 9.4; or
(3) issuances of Partnership Interests as part of a CMFT Capital Event that is undertaken in accordance with Section 7.9 and is accompanied by the adjustment, as and if required pursuant to Exhibit D, to the holdings of Class A Limited Partnership Units and CMFT Voting Preferred Share Votes.
(b) Issuance of Additional Securities. CMFT shall not issue any additional CMFT Common Shares, CMFT Voting Preferred Shares, other shares of CMFT Capital Stock or other equity interests in CMFT or any other rights, options, warrants or convertible or exchangeable securities containing the right to subscribe for or purchase CMFT Common Shares or any other equity interests in CMFT (collectively, “Additional Securities”) other than:
-14-
(i) Issuances of shares of CMFT Capital Stock (other than the CMFT Voting Preferred Shares and CMFT Common Shares) to all holders of CMFT Capital Stock on a pro rata basis with respect to their existing CMFT Capital Stock shareholdings;
(ii) Issuances of CMFT Common Shares in connection with an exchange or redemption made pursuant to Section 9.4;
(iii) Issuances of shares of CMFT Capital Stock as part of a CMFT Capital Event that is undertaken in accordance with Section 7.9 and is accompanied by the adjustment, as and if required pursuant to Exhibit D, to the holdings of Class A Limited Partnership Units and CMFT Voting Preferred Share Votes; or
(iv) Issuances of CMFT Voting Preferred Shares concurrently with issuances of Class A Limited Partnership Units in which the amount of CMFT Voting Preferred Share Votes associated with such CMFT Voting Preferred Shares equals the Class A Limited Partnership Units concurrently issued.
For the avoidance of doubt, all issuances under this Section 4.3(b) shall be subject to the requirements of Section 7.7 and Section 7.10. Subject to the foregoing restrictions, CMFT is expressly authorized to issue Additional Securities for less than fair market value, and to cause the Partnership to issue to CMFT corresponding Partnership Units, so long as (A) CMFT concludes in good faith that such issuance is in the best interests of CMFT and the Partnership, including without limitation, the issuance of shares of CMFT Capital Stock and corresponding Partnership Units pursuant to an employee share purchase plan providing for employee purchases of shares of CMFT Capital Stock at a discount from fair market value or the issuance of employee stock options that have an exercise price that is less than the fair market value of the shares of CMFT Capital Stock, either at the time of issuance or at the time of exercise, restricted shares of CMFT Capital Stock, restricted stock units, stock incentives, stock appreciation rights or other forms of equity compensation with respect to CMFT Capital Stock to employees, officers or directors, and (B) CMFT contributes directly or indirectly any proceeds from such issuance to the Partnership.
(c) Certain Deemed Contributions of Proceeds of Issuance of CMFT Capital Stock. In connection with any and all issuances of CMFT Common Shares or other shares of CMFT Capital Stock, CMFT shall be deemed to have made Capital Contributions to the Partnership only to the extent and in the amount equal to the proceeds from such issuances that are actually contributed to the Partnership by CMFT, provided, that with respect to any underwriter’s discount or other fees or expenses paid or incurred by CMFT in connection with such issuance, the Partnership shall be responsible for (and CMFT shall be deemed to have also made a Capital Contribution to the Partnership in respect of) the Contributed Percentage of such offering expenses or other fees or expenses.
(d) Equity Interests in the CMFT General Partner. At all times prior to the Consent Rights Expiration Time, CMFT shall own all of the issued and outstanding equity interests in the CMFT General Partner, and shall not permit any Transfer of any equity interests in the CMFT General Partner to any Person other than CMFT without the prior written consent of Limited Partners holding more than 50% of the then issued and outstanding Class A Limited Partnership Units.
-15-
4.4 Additional Funding. If the General Partner determines that it is in the best interests of the Partnership to provide for additional Partnership funds (“Additional Funds”) for any Partnership purpose, the General Partner may (a) cause the Partnership to obtain such funds from outside debt borrowings or (b) elect to have the General Partner, CMFT or any of their Affiliates provide such Additional Funds to the Partnership through loans or otherwise, in each case, subject to Section 7.7.
4.5 Percentage Interests. If the number of outstanding Partnership Units increases or decreases during a taxable year, each Partner’s Percentage Interest shall be adjusted by the General Partner effective as of the date of each such increase or decrease to a percentage equal to the number of Partnership Units held by such Partner divided by the aggregate number of Partnership Units outstanding after giving effect to such increase or decrease. In such event, the General Partner shall revalue the property of the Partnership and the Capital Account for each Partner shall be adjusted as set forth in Section 6.1. If the Partners’ Percentage Interests are adjusted pursuant to this Section 4.5, the Profits and Losses for the taxable year in which the adjustment occurs shall be prorated between the part of the year ending on the day when the Partnership’s property is revalued by the General Partner and the part of the year beginning on the following day and, as so divided, shall be allocated to the Partners based on their Percentage Interests before adjustment, and their adjusted Percentage Interests, respectively, either (a) as if the taxable year had ended on the date of the adjustment or (b) based on the number of days in each part. The General Partner, in its sole and absolute discretion, shall determine which method shall be used to allocate Profits and Losses for the taxable year in which an adjustment occurs, as may be required or permitted under Section 706 of the Code.
4.6 Return of Capital Contributions. No Partner shall be entitled to withdraw any part of its Capital Contribution or its Capital Account or to receive any distribution from the Partnership, except as specifically provided in this Agreement. Except as otherwise provided herein, there shall be no obligation to return to any Partner or withdrawn Partner any part of such Partner’s Capital Contribution for so long as the Partnership continues in existence.
4.7 No Third-Party Beneficiary. No creditor or other third party having dealings with the Partnership shall have the right to enforce the right or obligation of any Partner to make Capital Contributions or loans or to pursue any other right or remedy hereunder or at law or in equity, it being understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely by, the parties hereto and their respective successors and assigns. None of the rights or obligations of the Partners herein set forth to make Capital Contributions or loans to the Partnership shall be deemed an asset of the Partnership for any purpose by any creditor or other third party, nor may such rights or obligations be sold, transferred or assigned by the Partnership or pledged or encumbered by the Partnership to secure any debt or other obligation of the Partnership or of any of the Partners. In addition, it is the intent of the parties hereto that no distribution to any Limited Partner shall be deemed a return of money or other property in violation of the Act. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Limited Partner is obligated to return such money or property, such obligation shall be the obligation of such Limited Partner and not of the General Partner.
4.8 Preemptive Rights. Notwithstanding anything else in this Agreement to the contrary, the Partnership shall not, and shall not permit any Subsidiary of the Partnership to, undertake any Prospective Issuance to any Person (each, a “Prospective Subscriber”), except in compliance with the provisions of this Section 4.8.
-16-
(a) Participation Notice. Not less than twenty (20) Business Days prior to the consummation of the Prospective Issuance, the Partnership shall give a written notice (the “Participation Notice”) to each Limited Partner pursuant to Section 14.1 setting forth:
(i) The terms of the proposed Prospective Issuance, including (A) the class or series of Subject Securities to be included in the Prospective Issuance, (B) the aggregate number of Subject Securities to be offered in the Prospective Issuance, (C) the amount of consideration per unit of the Subject Securities to be offered in the Prospective Issuance and (D) the name of each Prospective Subscriber, together with the number of Subject Securities to be issued to each such Prospective Subscriber; and
(ii) An offer by the Partnership to issue or cause to be issued at the same price to be offered to and paid by each Prospective Subscriber in such Prospective Issuance and on the same terms and conditions otherwise applicable thereto, at the option of such Limited Partner, up to an amount sufficient for such Limited Partner to maintain its Percentage Interest as of immediately prior to the proposed Prospective Issuance.
(b) Participation Commitment. Each Limited Partner desiring to accept the offer contained in the Participation Notice (each, a “Participating Buyer”) shall send a commitment (each, a “Participation Commitment”) to the Partnership within ten (10) Business Days after such Limited Partner’s receipt of the Participation Notice (such period of time, the “Participation Offer Period”), with such Participation Commitment specifying the number of Subject Securities which such Limited Partner desires to purchase. Each such Limited Partner which has not so accepted such offer shall be deemed to have waived all of such Limited Partner’s rights with respect to the Prospective Issuance under this Section 4.8. Upon the expiration of the applicable Participation Offer Period, the Partnership shall notify each Participating Buyer in writing of any securities that a Limited Partner has elected not to purchase (the “Remaining Securities”). Upon receipt of such written notice, each Participating Buyer shall have three (3) Business Days thereafter to indicate to the Partnership its intention to purchase a portion of the Remaining Securities (which shall not exceed such Participating Buyer’s Percentage Interest).
(c) Cooperation. Each Limited Partner, whether in its capacity as a Participating Buyer, Limited Partner or General Partner, or otherwise, shall take or cause to be taken all such reasonable actions as may be necessary, reasonably desirable or otherwise requested by the Partnership in order to expeditiously consummate each Prospective Issuance pursuant to this Section 4.8 and any related transactions, including executing, acknowledging and delivering consents, assignments, waivers and other documents or instruments, filing applications, reports, returns, filings and other documents or instruments with governmental authorities, and otherwise cooperating with the Partnership, the Prospective Subscribers and the Participating Buyers (if any). Without limiting the generality of the foregoing, each Participating Buyer and Limited Partner agrees to execute and deliver such ancillary documents to which the Prospective Subscriber shall be a party.
(d) Closing. The closing of a Prospective Issuance pursuant to this Section 4.8 shall take place on such date and at such time and place as the Partnership shall specify in the Participation Notice applicable to such Prospective Issuance, with the date of such closing to be not less than twenty (20) Business Days after the date on which the Partnership is required to provide Participation Notices in respect of such Prospective Issuance. At the closing of any
-17-
Prospective Issuance under this Section 4.8, the Partnership shall deliver to each Participating Buyer the certificates or other instruments, if any, evidencing the Subject Securities to be issued to such Participating Buyer, registered in the name of such Participating Buyer or its designated nominee, free and clear of any liens or encumbrances, with any transfer tax stamps affixed, against delivery by such Participating Buyer of the applicable consideration.
(e) Compliance with Law. The Partnership shall comply with any applicable securities laws before pursuing and consummating any Prospective Issuance.
ARTICLE V
DISTRIBUTIONS
5.1 Distributions.
(a) Any and all distributions by the Partnership of cash, stock or any other property to the Partners shall be made to the Partners in accordance with and in proportion to their respective Percentage Interests. Subject to the Partnership’s obligation to make Tax Distributions pursuant to Section 5.1(b), the determination as to whether or not to make a distribution to Partners shall be made in the sole discretion of the General Partner so long as any distribution so made (i) is made in compliance with applicable law and effected in accordance with the first sentence of this Section 5.1(a) and (ii) in the case of any distribution of cash, is made out of Available Cash. Except (x) as set forth in the Contribution Agreement or (y) prior to the Consent Rights Expiration Time, with the prior written consent of Limited Partners holding more than 50% of the then issued and outstanding Class A Limited Partnership Units, all distributions pursuant to this Section shall be made pro rata from each component of distributable proceeds, such that the relative composition of such distributable proceeds (including, without limitation, cash, securities and other property) is preserved in each distribution.
(b) To the extent Available Cash is legally available for distribution by the Partnership, with respect to each fiscal quarter, the Partnership shall make quarterly cash distributions to the Partners, in accordance with and in proportion to their respective Percentage Interests, in an amount sufficient to ensure that each Partner receives a distribution at least equal to such Partner’s Assumed Tax Liability with respect to the relevant taxable period to which the distribution relates (“Tax Distributions”); provided that a final accounting for Tax Distributions shall be made for each taxable year after the allocation of the Partnership’s actual net taxable income or loss has been determined and any shortfall in the amount of Tax Distributions a Partner received for such taxable year based on such final accounting shall promptly be distributed to such Partner. For the avoidance of doubt, any excess Tax Distributions a Partner receives with respect to any taxable year shall reduce future Tax Distributions otherwise required to be made to such Partner with respect to any subsequent taxable year.
(i) If, on the date of a Tax Distribution, there is insufficient Available Cash to distribute, or the Partnership is restricted by the terms of its or its Subsidiaries’ indebtedness from distributing, in each case, to the Partners the full amount of the Tax Distributions to which such Partners are otherwise entitled, distributions pursuant to this Section 5.1(b) shall be made to the Partners to the extent of Available Cash in accordance with their Percentage Interests and the Partnership shall make future Tax Distributions as soon as funds become available sufficient to pay the remaining portion of the Tax Distributions to which such Partners are otherwise entitled.
-18-
(c) Notwithstanding any other provision of this Agreement, the General Partner is authorized to take any action that it determines to be necessary or appropriate to cause the Partnership to comply with any withholding requirements established under the Code or any other applicable federal, state or local law including, without limitation, the requirements of Sections 1441, 1442, 1445 and 1446 of the Code. The General Partner shall cause the Partnership to provide, and the Partnership shall provide, advance notice of its intent to deduct and withhold any such amounts (which notice shall include a statement of the amounts it intends to deduct or withhold in respect of making such payment and the basis for any such withholding or deduction) and shall provide a reasonable opportunity for such Partner to provide such forms or other evidence that would eliminate or reduce any such deduction or withholding and the Partnership and such Partner shall cooperate in good faith to reduce or eliminate such deduction or withholding. To the extent that the Partnership is required to withhold and pay over to any taxing authority any amount resulting from the allocation or distribution of income to a Partner or its assignee (including by reason of Section 1446 of the Code), either (i) if the actual amount to be distributed to the Partner or assignee equals or exceeds the amount required to be withheld by the Partnership, the amount withheld shall be treated as a distribution of cash in the amount of such withholding to such Partner or assignee or (ii) if the actual amount to be distributed to the Partner or assignee is less than the amount required to be withheld by the Partnership, the amount required to be withheld shall be treated as a loan (a “Partnership Loan”) from the Partnership to the Partner or assignee on the day that the Partnership pays over such amount to a taxing authority. A Partnership Loan shall be repaid through withholding by the Partnership with respect to subsequent distributions to the applicable Partner or assignee. In the event that a Limited Partner (a “Defaulting Limited Partner”) fails to pay any amount owed to the Partnership with respect to the Partnership Loan within fifteen (15) days after demand for payment thereof is made by the Partnership on the Limited Partner, the General Partner, in its sole and absolute discretion, may elect to make the payment to the Partnership on behalf of such Defaulting Limited Partner. In such event, on the date of payment, the General Partner shall be deemed to have extended a loan (a “General Partner Loan”) to the Defaulting Limited Partner in the amount of the payment made by the General Partner and shall succeed to all rights and remedies of the Partnership against the Defaulting Limited Partner as to that amount. Without limitation, the General Partner shall have the right to receive any distributions that otherwise would be made by the Partnership to the Defaulting Limited Partner until such time as the General Partner Loan has been paid in full, and any such distributions so received by the General Partner shall be treated as having been received by the Defaulting Limited Partner and immediately paid to the General Partner. Any amounts treated as a Partnership Loan or a General Partner Loan pursuant to this Section 5.1(c) shall bear interest at the lesser of (A) a rate per annum equal to the prime interest rate published in The Wall Street Journal or (B) the maximum lawful rate of interest on such obligation, such interest to accrue from the date the Partnership or the General Partner, as applicable, is deemed to extend the loan until such loan is repaid in full. The obligations set forth in this Section 5.1(c) shall survive a Partner’s ceasing to be a Partner of the Partnership, the termination, dissolution, liquidation or winding up of the Partnership and the termination of this Agreement.
5.2 Limitations on Return of Capital Contributions. Notwithstanding any other provision of this Article V, no Partner shall have the right to receive and the General Partner shall not have the right to make a distribution that includes a return of all or part of a Partner’s Capital Contributions, unless after giving effect to the return of a Capital Contribution, the sum of all Partnership liabilities, other than the liabilities to a Partner for the return of its Capital Contribution, does not exceed the fair market value of the Partnership’s assets.
-19-
5.3 Distributions Upon Liquidation. Upon liquidation of the Partnership, after payment of, or adequate provision for, debts and obligations of the Partnership, including any Partner loans, any remaining assets of the Partnership shall be distributed to all Partners in accordance with and in proportion to their respective Percentage Interests. To the extent deemed advisable by the General Partner, appropriate arrangements (including the use of a liquidating trust) may be made to assure that adequate funds are available to pay any contingent debts or obligations.
ARTICLE VI
CAPITAL ACCOUNTS; ALLOCATIONS
6.1 Capital Accounts.
(a) The Partnership shall maintain a separate Capital Account for each Partner according to the rules of Regulations Section 1.704-1(b)(2)(iv), provided that sub-capital accounts may (in the discretion of the General Partner) be maintained with respect to each Class A Series held by a Partner. For such purpose, the Partnership may (in the discretion of the General Partner), upon the occurrence of the events specified in Regulations Section 1.704-1(b)(2)(iv)(f), increase or decrease the Capital Accounts in accordance with the rules of Regulations Section 1.704-1(b)(2)(iv)(g) to reflect a revaluation of the Partnership’s property.
(b) For purposes of computing the amount of any Profits or Losses with respect to the Partnership to be allocated pursuant to this Article VI and to be reflected in the Capital Accounts of the Partners, the determination, recognition and classification of any such item shall be the same as its determination, recognition and classification for U.S. federal income tax purposes (including any method of depreciation, cost recovery or amortization used for this purpose).
6.2 No Deficit Make Up. No Partner shall be obligated to the Partnership, or to any other Partner, solely because of a deficit balance in such Partner’s Capital Account.
6.3 Allocation of Profits and Losses.
(a) General Allocations. Except as otherwise provided in this Agreement, and after giving effect to the special allocations set forth in Section 6.3(b), Profits and Losses (and, to the extent necessary, individual items of income, gain, loss, deduction or credit) of the Partnership for any taxable year or other relevant period shall be allocated among Partners pro rata in accordance with their respective Percentage Interests. Notwithstanding the foregoing, the General Partner may make such adjustments to Capital Accounts as it determines in its sole discretion to be appropriate to ensure allocations are made in accordance with a Partner’s interest in the Partnership.
(b) Regulatory Allocations.
(i) Deductions attributable to partner nonrecourse debt (as defined in Regulations Section 1.704-2(b)(4)) shall be allocated in the manner required by Regulations Section 1.704-2(i). If there is a net decrease during a taxable year in partner nonrecourse debt minimum gain (determined in accordance with Regulations Section 1.704-2(i)(3)), items of income and gain for such taxable year (and, if necessary, for subsequent taxable years) shall be allocated to the Partners in the amounts and of such character as determined according to Regulations Section 1.704-2(i)(4).
-20-
(ii) Nonrecourse deductions (as determined according to Regulations Section 1.704-2(b)(1)) for any taxable year shall be allocated pro rata among the Partners in accordance with their Percentage Interests. Except as otherwise provided in Section 6.3(b)(i), if there is a net decrease in the minimum gain during any taxable year, each Partner shall be allocated items of income and gain for such taxable year (and, if necessary, for subsequent taxable years) in the amounts and of such character as determined according to Regulations Section 1.704-2(f). This Section 6.3(b)(ii) is intended to be a minimum gain chargeback provision that complies with the requirements of Regulations Section 1.704-2(f) and shall be interpreted in a manner consistent therewith.
(iii) If any Partner that unexpectedly receives an adjustment, allocation or distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) has an adjusted Capital Account deficit as of the end of any taxable year, computed after the application of Sections 6.3(b)(i) and 6.3(b)(ii) but before the application of any other provision of this Article VI, then items of income and gain for such taxable year shall be allocated to such Partner in proportion to, and to the extent of, such adjusted Capital Account deficit. This Section 6.3(b)(iii) is intended to be a qualified income offset provision as described in Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner consistent therewith.
(iv) If the allocation of Losses to a Partner as provided in Section 6.3(a) would create or increase an adjusted Capital Account deficit, there shall be allocated to such Partner only that amount of Losses as will not create or increase an adjusted Capital Account deficit. The Losses (or items of loss or deduction) that would, absent the application of the preceding sentence, otherwise be allocated to such Partner shall be allocated to the other Partners in accordance with their relative Percentage Interests, subject to this Section 6.3(b)(iv).
(v) Profits and Losses described in Section 6.1(b) above shall be allocated in a manner consistent with the manner that the adjustments to the Capital Accounts are required to be made pursuant to Regulations Section 1.704-1(b)(2)(iv)(j), (k) and (m).
Any allocations pursuant to the provisions of this Section 6.3(b) shall be taken into account in computing allocations pursuant to Section 6.3(a), so that the cumulative net amount of all items allocated to each Partner shall, to the extent possible, be equal to the cumulative net amount that would have been allocated to such Partner if there had never been any allocations pursuant to the provisions of this Section 6.3(b).
Notwithstanding the other provisions of this Article VI, the General Partner shall be authorized to make, in its good faith discretion, appropriate amendments to the allocations of Profits and Losses (and to individual items of income, gain, loss, deduction and credit) pursuant to this Agreement (i) to comply with Section 704 of the Code or applicable Regulations, and/or (ii) to allocate properly Profits and Losses (and individual items of income, gain, loss, deduction and credit) to those Partners that bear the economic burden or benefit associated therewith (including by making one or more special allocations of income, gain, loss, deduction and credit to one or more Partners). If there are any changes after the date of this Agreement in applicable tax law, regulations or interpretation, or any errors, ambiguities, inconsistencies or omissions in this Agreement with respect to allocations to be made to Capital Accounts which would, individually or in the aggregate, cause the Partners not to achieve in any material respect the economic objectives underlying this Agreement, the General Partner may in its discretion make appropriate adjustments to such allocations in order to achieve or approximate such economic objectives.
-21-
(c) Tax Allocations.
(i) The income, gains, losses, deductions and credits of the Partnership will be allocated, for federal, state and local income tax purposes, among the Partners in accordance with the allocation of such income, gains, losses, deductions and credits among the Partners for computing their Capital Accounts; provided that if any such allocation is not permitted by the Code or other applicable law, the Partnership’s subsequent income, gains, losses, deductions and credits will be allocated among the Partners so as to reflect as nearly as possible the allocation set forth herein in computing their Capital Accounts.
(ii) Items of taxable income, gain, loss and deduction of the Partnership with respect to any Contributed Property to the capital of the Partnership shall be allocated among the Partners in accordance with Section 704(c) of the Code so as to take account of any variation between the adjusted basis of such property to the Partnership for federal income tax purposes and its Book Value; provided that such items arising in respect of CIM Group Management shall be allocated to the Class A-1 Limited Partnership Units and such items arising in respect of CIM Group Investments shall be allocated to the Class A-2 Limited Partnership Units.
(iii) If the Book Value of any property of the Partnership is adjusted pursuant to Section 6.1(a), including adjustments to the Book Value of any property of the Partnership in connection with the execution of this Agreement, subsequent allocations of items of taxable income, gain, loss and deduction with respect to such property shall take account of any variation between the adjusted basis of such property for federal income tax purposes and its Book Value.
(iv) Allocations of tax credits, tax credit recapture and any items related thereto shall be allocated to the Partners as determined by the General Partner taking into account the principles of Regulations Section 1.704-1(b)(4)(ii).
(v) For purposes of determining a Partner’s share of the Partnership’s “excess nonrecourse liabilities” within the meaning of Regulations Section 1.752-3(a)(3), each Partner’s interest in income and gain shall be determined pursuant to any proper method, as reasonably determined by the General Partner; provided, that each year the General Partner shall use commercially reasonable efforts (using in all instances any proper method, including, without limitation, the “additional method” described in Regulations Section 1.752-3(a)(3)) to allocate a sufficient amount of the excess nonrecourse liabilities to those Partners who would have at the end of the applicable taxable year, but for such allocation, taxable income due to the deemed distribution of money to such Partner pursuant to Section 752(b) of the Code that is in excess of such Partner’s adjusted tax basis in its Partnership Units; provided, further, that with respect to any of the Partnership’s “excess nonrecourse liabilities” that arise after the date hereof, the General Partner shall not be required to allocate “excess nonrecourse liabilities” in the manner described in the preceding proviso to the extent that the General Partner determines in its sole discretion made in good faith that such allocation would reasonably be expected to have an adverse impact on CMFT, in which case the Partners’ shares of such “excess nonrecourse liabilities” shall be determined in accordance with the Partners’ respective shares of the Partnership’s Profits.
-22-
(vi) Allocations pursuant to this Section 6.3(c) are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Partner’s Capital Account or share of Profits, Losses, distributions or other items of the Partnership pursuant to any provision of this Agreement.
The amounts of the items of Partnership income, gain, loss or deduction available to be specially allocated pursuant to Section 6.3(b) and this Section 6.3(c) shall be determined by applying rules analogous to those set forth in subparagraphs (i) through (vi) of the definition of Profits and Losses.
(d) If a Partner transfers any part or all of its Partnership Interest, the distributive shares of the various items of Profits and Losses allocable among the Partners during such fiscal year of the Partnership shall be allocated between the transferor and the transferee Partner either (i) as if the Partnership’s fiscal year had ended on the date of the transfer or (ii) based on the number of days of such fiscal year that each was a Partner without regard to the results of Partnership activities in the respective portions of such fiscal year in which the transferor and the transferee were Partners. The General Partner, in its sole and absolute discretion, shall determine which method shall be used to allocate the distributive shares of the various items of Profits and Losses between the transferor and the transferee Partner.
(e) Items of Partnership income, gain, expense and deductions with respect to any Contributed Property to the Partnership shall be allocated in accordance with Section 704(c) of the Code and the “traditional method” under Regulations Section 1.704-3(b) so as to take into account any variation between the adjusted tax basis of such Contributed Property for U.S. federal income tax purposes and its Book Value; provided that the traditional method with curative allocations (as described in the final sentence of Regulations Section 1.704-3(c)(3)(iii)(B)) shall apply with respect to gain from the sale of such Contributed Property.
(f) With respect to any other property to which Section 704(c) applies, the General Partner shall have the authority, in its sole and absolute discretion, to elect the method or methods to be used by the Partnership for allocating items of income, gain, expense and deductions as required by Section 704(c) of the Code.
ARTICLE VII
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
7.1 Management of the Partnership.
(a) Except as otherwise expressly provided in this Agreement (including, for the avoidance of doubt, Section 7.7), the General Partner shall have full, complete and exclusive discretion to manage and control the business of the Partnership for the purposes herein stated, and shall make all decisions affecting the business and assets of the Partnership. Subject to the restrictions and other requirements specifically contained in this Agreement (including, for the avoidance of doubt, Section 7.7), the powers and obligations, as the context requires, of the General Partner shall include, without limitation, the authority to take the following actions on behalf of the Partnership:
-23-
(i) to acquire, purchase, own, operate, lease and dispose of any real property and any other property or assets including, but not limited to notes, mortgages, partnership or joint venture interests or securities, that the General Partner determines are necessary or appropriate or in the best interests of the business of the Partnership;
(ii) to construct buildings and make other improvements on the Properties owned or leased by the Partnership;
(iii) to authorize, issue, sell, redeem or otherwise purchase any Partnership Units or any securities (including secured and unsecured debt obligations of the Partnership, debt obligations of the Partnership convertible into any class or series of Partnership Interests, or options, rights, warrants or appreciation rights relating to any Partnership Units) of the Partnership;
(iv) to borrow or lend money for the Partnership, issue or receive evidences of indebtedness in connection therewith, refinance, increase the amount of, modify, amend or change the terms of, or extend the time for the payment of, any such indebtedness, and secure such indebtedness by mortgage, deed of trust, pledge or other lien on the Partnership’s assets;
(v) to pay, either directly or by reimbursement, for all administrative and operating costs and expenses incurred by the Partnership to third parties or to the General Partner or its Affiliates as set forth in this Agreement;
(vi) to guarantee or become a co-maker of indebtedness of the General Partner or any Subsidiary thereof, refinance, increase the amount of, modify, amend or change the terms of, or extend the time for the payment of, any such guarantee or indebtedness, and secure such guarantee or indebtedness by mortgage, deed of trust, pledge or other lien on the Partnership’s assets, provided that any such guarantee is related to Partnership business;
(vii) to use assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with this Agreement, including, without limitation, payment, either directly or by reimbursement, of all administrative and operating costs and expenses incurred by the Partnership, to third parties or to the General Partner as set forth in this Agreement;
(viii) to lease all or any portion of any of the Partnership’s assets, whether or not the terms of such leases extend beyond the termination date of the Partnership and whether or not any portion of the Partnership’s assets so leased are to be occupied by the lessee, or, in turn, subleased in whole or in part to others, for such consideration and on such terms as the General Partner may determine;
(ix) to prosecute, defend, arbitrate or compromise any and all claims or liabilities in favor of or against the Partnership, on such terms and in such manner as the General Partner may reasonably determine, and similarly, to prosecute, settle or defend litigation with respect to the Partners, the Partnership or the Partnership’s assets;
(x) to file applications, communicate and otherwise deal with any and all governmental agencies having jurisdiction over, or in any way affecting, the Partnership’s assets or any other aspect of the Partnership business;
-24-
(xi) to make or revoke any election permitted or required of the Partnership by any taxing authority;
(xii) to maintain such insurance coverage for public liability, fire and casualty, and any and all other insurance for the protection of the Partnership, for the conservation of Partnership assets or for any other purpose convenient or beneficial to the Partnership, in such amounts and such types, as it shall determine from time to time;
(xiii) to determine whether or not to apply any insurance proceeds for any Property to the restoration of such Property or to distribute the same;
(xiv) to establish one or more divisions of the Partnership, to hire and dismiss employees of the Partnership or any division of the Partnership, and to retain legal counsel, accountants, consultants, real estate brokers and such other persons, as the General Partner may deem necessary or appropriate in connection with the Partnership business and to pay such persons remuneration as the General Partner may deem reasonable and proper;
(xv) to retain other services of any kind or nature in connection with Partnership business and to pay such remuneration as the General Partner may deem reasonable and proper for same;
(xvi) to negotiate and conclude agreements on behalf of the Partnership with respect to any of the rights, powers and authority conferred upon the General Partner;
(xvii) to maintain accurate accounting records and to file promptly all federal, state and local income tax returns on behalf of the Partnership;
(xviii) to distribute Partnership cash or other Partnership assets in accordance with this Agreement;
(xix) to form or acquire an interest in, and contribute property to, any further limited or general partnerships, joint ventures, limited liability companies or other entities or relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contributions of property to, its Subsidiaries and any other Person in which it has an equity interest from time to time);
(xx) to establish Partnership reserves for working capital, capital expenditures, contingent liabilities or any other valid Partnership purpose;
(xxi) to merge, consolidate or combine the Partnership with or into another Person;
(xxii) to do any and all acts and things necessary or prudent to ensure that the Partnership will not be classified as a “publicly traded partnership” for purposes of Section 7704 of the Code; and
(xxiii) to take such other action, execute, acknowledge, swear to or deliver such other documents and instruments, and perform any and all other acts that the General Partner deems necessary or appropriate for the formation, continuation and conduct of the business and affairs of the Partnership and to possess and enjoy all of the rights and powers of a general partner as provided by the Act.
-25-
7.2 Delegation of Authority. The General Partner may delegate any or all of its powers, rights and obligations hereunder, and may appoint, employ, contract or otherwise deal with any Person (including without limitation officers or other agents of the Partnership or the General Partner appointed by the General Partner) for the transaction of the business of the Partnership, which Person may, under supervision of the General Partner, perform any acts or services for the Partnership as the General Partner may approve.
7.3 Indemnification and Exculpation of Indemnitees.
(a) The Partnership shall indemnify an Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including reasonable legal fees and expenses), judgments, fines, settlements, and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Partnership as set forth in this Agreement in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise (“Actions”), as a result of acting on behalf of or performing services for the Partnership; provided, however, that the Partnership shall not indemnify an Indemnitee (i) if the act or omission of the Indemnitee was material to the matter giving rise to the Action and either was committed in bad faith or was the result of active and deliberate dishonesty; (ii) in the case of any criminal proceeding, if the Indemnitee had reasonable cause to believe that the act or omission was unlawful; or (iii) for any transaction for which such Indemnitee actually received an improper personal benefit in violation or breach of any provision of this Agreement; and provided, further, that no payments pursuant to this Agreement shall be made by the Partnership to indemnify or advance funds to any Indemnitee (x) with respect to any Action initiated or brought voluntarily by such Indemnitee (and not by way of defense) unless (I) approved or authorized by the General Partner or (II) incurred to establish or enforce such Indemnitee’s right to indemnification under this Agreement, and (y) in connection with one or more Actions or claims brought by the Partnership or involving such Indemnitee if such Indemnitee is found liable to the Partnership on any portion of any claim in any such Action. The termination of any proceeding by judgment, order or settlement does not create a presumption that the Indemnitee did not meet the requisite standard of conduct set forth in this Section 7.3(a). Any indemnification pursuant to this Section 7.3 shall be made only out of the assets of the Partnership.
(b) To the maximum extent permitted by law and without requiring a preliminary determination of the ultimate entitlement to indemnification, the Partnership shall pay or reimburse reasonable legal expenses and other costs incurred by an Indemnitee who is or is threatened to be made a party to, or witness in, a proceeding in advance of the final disposition of such proceeding if all of the following are satisfied: (i) the proceeding relates to acts or omissions with respect to the performance of duties for services on behalf of the Partnership, (ii) the Indemnitee provides the Partnership with written affirmation of the Indemnitee’s good faith belief that the Indemnitee has met the standard of conduct necessary for indemnification by the Partnership as authorized in this Section 7.3 and (iii) the Indemnitee provides the Partnership with a written undertaking to repay the amount paid or reimbursed by the Partnership if it is ultimately determined that the Indemnitee did not comply with the requisite standard of conduct and is not entitled to indemnification.
(c) The indemnification provided by this Section 7.3 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity.
-26-
(d) The Partnership may purchase and maintain insurance or establish other arrangements, including without limitation trust arrangements and letters of credit on behalf of or to secure indemnification obligations owed to the Indemnitees and such other Persons as the General Partner shall determine against any liability that may be asserted against or expenses that may be incurred by such Person in connection with the Partnership’s activities, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.
(e) For purposes of this Section 7.3, (i) the Partnership shall be deemed to have requested an Indemnitee to serve as a fiduciary of an employee benefit plan whenever the performance by the Indemnitee of its duties to the Partnership also imposes duties on the Indemnitee, or otherwise involves services by the Indemnitee to the plan or participants or beneficiaries of the plan; (ii) excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning of this Section 7.3; and (iii) actions taken or omitted by the Indemnitee with respect to an employee benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to personal liability by reason of the indemnification provisions set forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in part under this Section 7.3 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.3 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights in or be for the benefit of any other Persons.
7.4 Liability of the General Partner and Its Affiliates.
(a) Notwithstanding anything to the contrary set forth in this Agreement, the General Partner and its Affiliates shall not be liable for monetary damages to the Partnership or any Partners for losses sustained or liabilities incurred as a result of errors in judgment or any act or omission if the General Partner or such Affiliate acted in good faith. The General Partner and its Affiliates shall not be in breach of any duty that the General Partner or such Affiliate may owe to the Limited Partners or the Partnership or any other Persons under this Agreement or of any duty stated or implied by law or equity, provided, the General Partner or such Affiliate, acting in good faith, abides by the terms of this Agreement. In addition, to the extent the General Partner, its Affiliates, or any officer, director, manager, member, employee, agent or stockholder of the General Partner or such Affiliate performs its duties in accordance with the standards provided by the Act, as it may be amended from time to time, or under any successor statute thereto, such Person or Persons shall have no liability by reason of being or having been the General Partner, or by reason of being an Affiliate or an officer, director, manager, member, employee, agent or stockholder of the General Partner or its Affiliates. To the maximum extent that the Act and the general laws of the State of Delaware, in effect from time to time, permit limitation of the liability of general partners of a limited partnership, the General Partner and its officers, directors, managers, members, employees, agents and stockholders shall not be liable to the Partnership or to any Partner for money damages except to the extent that (i) the General Partner or its officers,
-27-
directors, managers, members, employees, agents or stockholders actually received an improper benefit or profit in money, property or services, in which case the liability shall not exceed the amount of the benefit or profit in money, property or services actually received; or (ii) a judgment or other final adjudication adverse to the General Partner or one or more of its officers, directors, managers, members, employees, agents or stockholders is entered in a proceeding based on a finding in the proceeding that the action or failure to act of the General Partner or one or more of its officers, directors, managers, members, employees, agents or stockholders was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding. Neither the amendment nor repeal of this Section 7.4(a), nor the adoption or amendment of any other provision of this Agreement inconsistent with this Section 7.4(a), shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption. In the absence of any Delaware statute limiting the liability of the General Partner or its directors or officers for money damages in a suit by or on behalf of the Partnership or by any Partner, the General Partner and the officers, directors, managers, members, employees, agents and stockholders of the General Partner shall not be liable to the Partnership or to any Partner for money damages except to the extent that (A) the General Partner or one or more of its officers, directors, managers, members, employees, agents or stockholders actually received an improper benefit or profit in money, property or services, in which case the liability shall not exceed the amount of the benefit or profit in money, property or services actually received; or (B) a judgment or other final adjudication adverse to the General Partner or one or more of its officers, directors, managers, members, employees, agents or stockholders is entered in a proceeding based on a finding in the proceeding that the action or failure to act of the General Partner or one or more of its officers, directors, managers, members, employees or stockholders was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding.
(b) The Limited Partners expressly acknowledge that the General Partner is acting on behalf of the Partnership, itself and its stockholders collectively, that the General Partner is under no obligation to consider the separate interests of the Limited Partners (including, without limitation, the tax consequences to Limited Partners or the tax consequences of some, but not all, of the Limited Partners) in deciding whether to cause the Partnership to take (or decline to take) any actions. In the event of a conflict between the interests of its stockholders on the one hand and the Limited Partners on the other, the General Partner shall endeavor in good faith to resolve the conflict in a manner not adverse to either its stockholders or the Limited Partners; provided, however, that for so long as the General Partner directly owns the General Partnership Interest in the Partnership, any such conflict that the General Partner, in its sole and absolute discretion, determines cannot be resolved in a manner not adverse to either its stockholders or the Limited Partners shall be resolved in favor of its stockholders. The General Partner and its Affiliates shall not be liable for monetary damages for losses sustained, liabilities incurred or benefits not derived by Limited Partners in connection with such decisions, provided that the General Partner and its Affiliates have acted in good faith.
(c) Subject to its obligations and duties as General Partner set forth in Section 7.1, the General Partner may exercise any of the powers granted to it under this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its agents. The General Partner shall not be responsible for any misconduct or negligence on the part of any such agent appointed by it in good faith.
-28-
(d) Any amendment, modification or repeal of this Section 7.4 or any provision thereof shall be prospective only and shall not in any way affect the limitations on the General Partner’s liability to the Partnership and the Limited Partners under this Section 7.4 as in effect immediately prior to such amendment, modification or repeal with respect to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when claims relating to such matters may arise or be asserted.
7.5 Reimbursement of General Partner.
(a) Except as provided in this Section 7.5, the General Partner shall not be compensated for its services as general partner of the Partnership.
(b) The General Partner shall be reimbursed by the Partnership on a monthly basis, or such other periodic basis as the General Partner may determine in its sole and absolute discretion, for all reasonable and documented administrative and operating costs and expenses incurred by the General Partner in connection with its service as general partner of the Partnership.
7.6 Outside Activities. Subject to Section 7.7, the Charter and any agreements entered into by CMFT, the General Partner or their Affiliates with the Partnership or a Subsidiary, or any officer, director, manager, member, employee, agent, trustee, Affiliate or stockholder of CMFT or the General Partner, each of CMFT and the General Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities substantially similar or identical to those of the Partnership. Subject to Section 7.7, neither the Partnership nor any of the Limited Partners shall have any rights by virtue of this Agreement in any such business ventures, interests or activities. Subject to Section 7.7, none of the Limited Partners or any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby in any such business ventures, interests or activities, and the General Partner shall have no obligation pursuant to this Agreement to offer any interest in any such business ventures, interests and activities to the Partnership or any Limited Partner, even if such opportunity is of a character which, if presented to the Partnership or any Limited Partner, could be taken by such Person.
7.7 Consent Rights. Notwithstanding any other provision of this Agreement, CMFT and the Partnership shall not, and shall cause each of their respective Subsidiaries (such entities, collectively, the “Restricted Entities”) not to, directly or indirectly, take any of the actions set forth in Exhibit C without the prior written consent of Limited Partners holding more than 50% of the then issued and outstanding Class A Limited Partnership Units or, in the case of such actions to be taken by CMFT or any Subsidiaries of CMFT that are not Subsidiaries of the Partnership, the holders of more than 50% of the then issued and outstanding CMFT Voting Preferred Shares; provided, however, that the foregoing requirement shall no longer apply from and after the Consent Rights Expiration Time.
7.8 Title to Partnership Assets. Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively, shall have any ownership interest in such Partnership assets or any portion thereof; provided, that title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner or one or more nominees, as the General Partner may determine. The General Partner hereby declares and warrants that any Partnership assets for which legal title is held in the name of the General Partner or any nominee shall be held by such Person for the use and benefit of the Partnership in accordance with the provisions of this Agreement; provided, that the General Partner shall use its best efforts to cause legal title to such assets to be vested in the Partnership as soon as reasonably practicable. All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which legal title to such Partnership assets is held.
-29-
7.9 CMFT Capital Events; New OP Capital Events.
(a) In the event CMFT issues any CMFT Common Shares and/or shares of another class or series of CMFT Capital Stock that does not involve an issuance of CMFT Voting Preferred Shares, or redeems, cancels or otherwise acquires any CMFT Common Shares and/or shares of another class or series of CMFT Capital Stock that does not involve a redemption, cancellation or acquisition of CMFT Voting Preferred Shares (any such issuance, redemption, cancellation or acquisition, a “CMFT Capital Event”), then CMFT shall cause the Partnership to issue to, or redeem, cancel or otherwise acquire from, CMFT the same number of Class B Limited Partnership Units (in the case of a CMFT Capital Event involving CMFT Common Shares) and/or other Corresponding Partnership Units (in case of a CMFT Capital Event involving another class or series of CMFT Capital Stock), and each Limited Partner’s holdings of issued and outstanding Class A Limited Partnership Units and CMFT Voting Preferred Share Votes shall automatically be adjusted, without requiring any further action by any other Person, by multiplying the number of issued and outstanding Class A Limited Partnership Units and CMFT Voting Preferred Share Votes held by such Limited Partner as of immediately prior to the consummation of such CMFT Capital Event by the Adjustment Factor.
(b) In the event New OP issues any Class B Limited Partnership Units to CMFT, or redeems, cancels or otherwise acquires any Class B Limited Partnership Units held by CMFT, other than, in each case, an issuance, redemption, cancellation or other acquisition effected as an adjustment pursuant to Section 7.9(a) (any such issuance, redemption, cancellation or acquisition, a “New OP Capital Event”), then (x) CMFT’s holdings of issued and outstanding Class B Limited Partnership Units shall automatically be adjusted, without requiring any further action by any other Person, to equal the total number of issued and outstanding CMFT Common Shares following the consummation of such New OP Capital Event (including after giving effect to any issuance, redemption, cancellation or acquisition of CMFT Common Shares undertaken in connection with such New OP Capital Event) (the “Adjusted CMFT Common Share Unit Count”) and (y) each Limited Partner’s holdings of issued and outstanding Class A Limited Partnership Units and CMFT Voting Preferred Share Votes shall automatically be adjusted, without requiring any further action by any other Person, by multiplying the number of issued and outstanding Class A Limited Partnership Units and CMFT Voting Preferred Share Votes held by such Limited Partner as of immediately prior to the consummation of such New OP Capital Event by the New OP Adjustment Factor. With respect to any New OP Capital Event, the “New OP Adjustment Factor” shall equal the quotient of (i) the Adjusted CMFT Common Share Unit Count following such New OP Capital Event divided by (ii) CMFT’s holdings of issued and outstanding Class B Limited Partnership Units immediately following such New OP Capital Event but prior to giving effect to the adjustment described in clause (x) of the immediately preceding sentence.
-30-
7.10 One-to-One Ratio Maintenance Provisions. The Conversion Factor, the ratio of issued and outstanding Class A Limited Partnership Units to issued and outstanding CMFT Voting Preferred Share Votes and the ratio of issued and outstanding Class B Limited Partnership Units to issued and outstanding CMFT Common Shares, shall, in each case, be equal to one. In furtherance of, and without limitation to, the foregoing or the provisions of Section 7.9, in the event that any issuance, redemption, repurchase, reclassification, split, subdivision, combination, recapitalization, equity distribution or other transaction involving any issuance or redemption of equity interests in CMFT (or the Partnership), after taking into account any related issuance, redemption, repurchase, reclassification, split, subdivision, combination, recapitalization, equity distribution or other transaction involving any issuance or redemption of equity interests in the Partnership (or CMFT), results in a discrepancy between the number of any shares of CMFT Capital Stock and the number of Corresponding Partnership Units, then, in order to preserve the alignment of the relative economic interests in the Partnership and CMFT, the equity interests in the Partnership and CMFT shall be adjusted as follows: (a) the number of outstanding Class B Limited Partnership Units shall be adjusted in an amount sufficient to restore a one-to-one correspondence with the number of outstanding CMFT Common Shares; (b) the number of outstanding Class A Limited Partnership Units shall be adjusted by the application of the Adjustment Factor or the New OP Adjustment Factor, as applicable, pursuant to Section 7.9; and (c) the number of CMFT Voting Preferred Share Votes represented by the then outstanding CMFT Voting Preferred Shares shall be adjusted so as to maintain a one-to-one correspondence with the number of outstanding Class A Limited Partnership Units.
ARTICLE VIII
CHANGES IN GENERAL PARTNER
8.1 Transfer of the General Partner’s Partnership Interest. The General Partner shall not withdraw or otherwise be dissolved or removed as General Partner or Transfer all or any portion of its General Partnership Interest to any Person other than the CIM Limited Partner or its Permitted Transferees, unless otherwise previously approved in writing by the Limited Partners holding more than 50% of the then issued and outstanding Class A Limited Partnership Units (provided, that, for the avoidance of doubt, such approval of the Limited Partners holding more than 50% of the then issued and outstanding Class A Limited Partnership Units, alone, shall not be sufficient to effect the withdrawal, dissolution or removal of the General Partner (or to effect the Transfer of all or any portion of the General Partnership Interest)).
8.2 Admission of a Substitute or Additional General Partner. A Person shall be admitted as a substitute or additional General Partner of the Partnership only in compliance with the requirements set forth in Section 7.7 and only if the following terms and conditions are satisfied:
(a) the Person to be admitted as a substitute or additional General Partner shall have accepted and agreed to be bound by all the terms and provisions of this Agreement by executing a counterpart and such other documents or instruments as may be required or appropriate in order to effect the admission of such Person as a General Partner, a certificate evidencing the admission of such Person as a General Partner shall have been filed for recordation and all other actions required by Section 2.5 in connection with such admission shall have been performed;
(b) if the Person to be admitted as a substitute or additional General Partner is a corporation or a partnership, it shall have provided the Partnership with evidence satisfactory to counsel for the Partnership of such Person’s authority to become a General Partner and to be bound by the terms and provisions of this Agreement; and
-31-
(c) counsel for the Partnership shall have rendered an opinion (relying on such opinions from other counsel in the state or any other jurisdiction as may be necessary) that the admission of the Person to be admitted as a substitute or additional General Partner is in conformity with the Act, and that none of the actions taken in connection with the admission of such Person as a substitute or additional General Partner will cause (i) the Partnership to be classified other than as a partnership for federal income tax purposes or (ii) the loss of any Limited Partner’s limited liability.
ARTICLE IX
RIGHTS AND OBLIGATIONS
OF THE LIMITED PARTNERS
9.1 Management of the Partnership. Subject to Section 7.7, the Limited Partners shall not participate in the management or control of Partnership business nor shall they transact any business for or on behalf of the Partnership, nor shall they have the power to sign for or bind the Partnership, such powers being vested solely and exclusively in the General Partner.
9.2 Power of Attorney. Each Limited Partner hereby irrevocably appoints the General Partner its true and lawful attorney-in-fact, who may act for each Limited Partner and in its name, place and stead, and for its use and benefit, sign, acknowledge, swear to, deliver, file or record, at the appropriate public offices, any and all documents, certificates and instruments as may be deemed necessary or desirable by the General Partner to carry out fully the provisions of this Agreement and the Act in accordance with their terms, which power of attorney is coupled with an interest and shall survive the death, dissolution or legal incapacity of the Limited Partner, or the transfer by the Limited Partner of any part or all of its Partnership Interest.
9.3 Limitation on Liability of Limited Partners. No Limited Partner shall be liable for any debts, liabilities, contracts or obligations of the Partnership. A Limited Partner shall be liable to the Partnership only to make payments of its Capital Contribution, if any, as and when due hereunder. After its Capital Contribution is fully paid, no Limited Partner shall, except as otherwise required by the Act, be required to make any further Capital Contributions or other payments or lend any funds to the Partnership.
9.4 Exchange Right.
(a) Subject to Sections 9.4(b) and 9.4(c), and subject to the potential modification of any rights or obligations provided for herein by agreement(s) between the Partnership and any one or more Limited Partners with respect to Partnership Units held by them, each Limited Partner shall have the right (the “Exchange Right”) to require the Partnership to redeem all or a portion of the Class A Limited Partnership Units held by such Limited Partner or to cause the consummation of a Permitted Merger with CMFT or a Subsidiary thereof on a Specified Exchange Date pursuant to Section 9.4(b); provided, however, that the CIM Limited Partner may only exercise its Exchange Rights if the CMFT Common Shares are listed on a national securities exchange registered under Section 6 of the Exchange Act. Unless the Exchanging Partner has notified CMFT in its Exchange Notice that it has elected to undertake a Permitted Merger to which CMFT has consented, CMFT may, in its discretion, elect to cause the Partnership to pay the consideration in the form of the applicable Cash Amount or CMFT Common Shares Amount due in respect of such redemption on the Specified Exchange Date. For the avoidance of doubt, in the event CMFT issues to all stockholders of CMFT Common Shares rights,
-32-
options, warrants or convertible or exchangeable securities entitling such stockholders to subscribe for or purchase CMFT Common Shares, or any other securities or property, and the rights have not expired at the Specified Exchange Date, then the CMFT Common Shares Amount shall also include such rights. The Exchange Right may be exercised pursuant to the delivery of an Exchange Notice to the Partnership (with a copy to CMFT) by the Limited Partner who is exercising the Exchange Right (the “Exchanging Partner”). The Exchanging Partner shall have no right, with respect to any Partnership Units so exchanged, to receive any distribution whose record date is on or after the Specified Exchange Date.
(b) An Exchanging Partner may, with CMFT’s consent (not to be unreasonably withheld, conditioned or delayed), elect in its Exchange Notice to require CMFT or a Subsidiary thereof to enter into and consummate a merger with such Exchanging Partner in which CMFT or such Subsidiary, as applicable, continues as the surviving entity (a “Permitted Merger”) and the applicable Class A Limited Partnership Units shall be cancelled. In connection with such Permitted Merger, such Exchanging Partner shall receive, on the Specified Exchange Date, the CMFT Common Shares Amount that such Exchanging Partner would otherwise have been entitled to receive pursuant to Section 9.4(a) if the Exchanging Partner had instead elected to require the Partnership to redeem all of the Class A Limited Partnership Units held by such Limited Partner in its Exchange Notice. Each other Partner agrees to execute such documents as the Exchanging Partner may reasonably require in connection with the consummation of a Permitted Merger and issuance of CMFT Common Shares to such Exchanging Partner pursuant to a Permitted Merger under this Section 9.4(b).
(c) Notwithstanding any other provision of this Agreement, CMFT shall place appropriate restrictions on the ability of the Limited Partners to exercise their Exchange Rights as and if deemed necessary to ensure that the Partnership does not constitute a “publicly traded partnership” under Section 7704 of the Code. If and when CMFT determines that imposing such restrictions is necessary, CMFT shall give prompt written notice thereof to each of the Limited Partners, which notice shall be accompanied by a copy of an opinion of counsel to the Partnership which states that, in the opinion of such counsel, restrictions are necessary in order to avoid the Partnership being treated as a “publicly traded partnership” under Section 7704 of the Code.
(d) Concurrently with the consummation of any exchange and redemption of Class A Limited Partnership Units pursuant to this Section 9.4 (including by means of a Permitted Merger), CMFT shall redeem the same number of CMFT Voting Preferred Shares for no additional consideration such that, following such redemption, the number of issued and outstanding Class A Limited Partnership Units and CMFT Voting Preferred Shares remains the same. Furthermore, in effectuating any redemption and exchange of the Class A Limited Partnership Units pursuant to this Section 9.4 (including by means of a Permitted Merger) in which the holder thereof is receiving CMFT Common Shares in consideration therefor, CMFT shall first contribute the applicable number of CMFT Common Shares to the Partnership, in consideration for which the Partnership shall then issue to CMFT an equivalent number of newly issued Class B Limited Partnership Units, and thereafter the Partnership shall exchange the applicable CMFT Common Shares with such holder in redemption for the applicable Class A Limited Partnership Units held by such holder and proposed to be so redeemed and/or exchanged pursuant to this Section 9.4.
-33-
(e) As of the applicable Specified Exchange Date, each Exchanging Partner hereby represents and warrants to CMFT and the Partnership that: (i) such Exchanging Partner understands that any CMFT Common Shares issuable upon exchange of such Exchanging Partner’s Class A Limited Partnership Units on such date constitute “restricted securities” under applicable federal securities laws and may not be offered, sold, assigned, pledged, transferred or otherwise disposed of except pursuant to an effective registration statement under the Securities Act and applicable state securities Laws or pursuant to an available exemption from, or in a transaction not subject to, such registration requirements; and (ii) such Exchanging Partner is and will be an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act.
9.5 Duties and Conflicts. Subject to Section 7.7, the Charter and any agreements entered into by the General Partner or its Affiliates with the Partnership or a Subsidiary, or any officer, director, manager, member, employee, agent, trustee, or stockholder of the General Partner or its Affiliates, the General Partner recognizes that the Limited Partners and their Affiliates have or may have other business interests, activities and investments, some of which may be in conflict or competition with the business of the Partnership, and that such Persons are entitled to carry on such other business interests, activities and investments. Subject to Section 7.7, the Limited Partners and their Affiliates may engage in or possess an interest in any other business or venture of any kind, independently or with others, on their own behalf or on behalf of other entities with which they are affiliated or associated, and such Persons may engage in any activities, whether or not competitive with the Partnership, without any obligation to offer any interest in such activities to the Partnership or to any Partner. Subject to Section 7.7, neither the Partnership nor any Partner shall have any right, by virtue of this Agreement, in or to such activities, or the income or profits derived therefrom, and the pursuit of such activities, even if competitive with the business of the Partnership, and such activities shall not be deemed wrongful or improper.
ARTICLE X
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
10.1 Purchase for Investment.
(a) Each Limited Partner hereby represents and warrants to the General Partner and to the Partnership that the acquisition of its Partnership Units is made as a principal for its account for investment purposes only and not with a view to the resale or distribution of such Partnership Interest.
(b) Each Limited Partner agrees that it will not sell, assign or otherwise transfer its Partnership Units or any fraction thereof, whether voluntarily or by operation of law or at judicial sale or otherwise, to any Person who does not make the representations and warranties to the General Partner set forth in Section 10.1(a) above.
10.2 Restrictions on Transfer of Limited Partnership Interests.
(a) No Partner may offer, sell, assign, hypothecate, pledge or otherwise transfer all or any portion of its Limited Partnership Interests, or any of such Partner’s economic rights as a Limited Partner, whether voluntarily or by operation of law or at judicial sale or otherwise (collectively, a “Transfer”), without the consent of the General Partner and, prior to the Consent Rights Expiration Time and solely with respect to any proposed Transfer by CMFT, the CIM Limited Partner, which consent may be granted or withheld in the sole and absolute discretion of the General Partner and the CIM Limited Partner, as applicable; provided that the foregoing shall not restrict any Transfers undertaken pursuant to the merger transactions expressly permitted by
-34-
Section 9.4(b). Any such purported transfer undertaken without such consent shall be considered to be null and void ab initio and shall not be given effect. The General Partner may require, as a condition of any Transfer to which it consents, that the transferor assume all reasonable and documented out-of-pocket costs incurred by the Partnership in connection therewith. Upon any Transfer or redemption of all of a Limited Partner’s Partnership Units that comprise such Limited Partner’s Limited Partnership Interests, such Limited Partner shall cease to be a Limited Partner.
(b) Notwithstanding the foregoing or any other provision in this Agreement, any Limited Partner (other than, prior to the Consent Rights Expiration Time, CMFT in respect of its Limited Partnership Interests) may effect, and shall not be prohibited from effecting, without the consent of the General Partner (or, prior to the Consent Rights Expiration Time and solely with respect to any proposed Transfer by CMFT, the CIM Limited Partner), (i) any Transfer of its Partnership Interests pursuant to Section 9.4, (ii) any Transfer pursuant to Section 5.5 of the Contribution Agreement or (iii) any other Transfer of its Limited Partnership Interests to (1) in the case of an individual, such individual’s spouse, domestic partner, lineal descendants (including by adoption), parents, or siblings, any trust established for the benefit of such individual and/or any of the foregoing persons, or any estate, partnership or other entity established for the benefit of, or directly or indirectly owned or controlled by, such individual and/or any of the foregoing persons or trusts (collectively, with respect to any individual, the Persons referenced in this clause (1), such individual’s “Specified Family and Trust Persons”), (2) in the case of an entity, any direct or indirect equityholder, partner or member of such entity, or any Affiliate of such equityholder, partner or member, (3) any successor by merger, consolidation, reorganization or similar transaction involving such Limited Partner, (4) any investment fund, vehicle or account (including parallel funds, co-investment vehicles, alternative investment vehicles or managed accounts) that is managed, advised or controlled by, or under common control with, such Limited Partner or any of such Limited Partner’s Affiliates or (5) any other Affiliate of such Limited Partner (any Transferee pursuant to clauses (i), (ii) or (iii), a “Permitted Transferee”). For the avoidance of doubt, (x) Permitted Transferees of the CIM Limited Partner shall include (A) Richard Ressler, Avraham Shemesh, Shaul Kuba and Mitsui & Co. Ltd, and (B) the Specified Family and Trust Persons of Richard Ressler, Avraham Shemesh and Shaul Kuba, or any Affiliate of any such Specified Family and Trust Persons, and any direct or indirect equityholder, partner or member of, or any Affiliate of such equityholder, partner or member of, Mitsui & Co. Ltd., and (y) Permitted Transferees of Richard Ressler, Avraham Shemesh, Shaul Kuba and Mitsui & Co. Ltd shall include the Specified Family and Trust Persons of, or any Affiliate of any such Specified Family and Trust Persons of, Richard Ressler, Avraham Shemesh and Shaul Kuba and any direct or indirect equityholder, partner or member of, or any Affiliate of such equityholder, partner or member of, Mitsui & Co. Ltd.
(c) No Limited Partner may effect a Transfer of its Limited Partnership Interest, in whole or in part, if, in the reasonable written opinion of outside legal counsel to the Partnership, such proposed Transfer would require the registration of the Limited Partnership Interest under the Securities Act, or would otherwise violate any applicable federal or state securities or blue sky law (including investment suitability standards).
-35-
(d) No transfer of any Partnership Units may be made to a lender to the Partnership or any Person who is related (within the meaning of Regulations Section 1.752-4(b)) to any lender to the Partnership whose loan constitutes a nonrecourse liability (within the meaning of Regulations Section 1.752-1(a)(2)), without the consent of the General Partner, which may be withheld in its sole and absolute discretion; provided, that as a condition to such consent the lender will be required to enter into an arrangement with the Partnership and the General Partner to exchange or redeem for the Cash Amount any Partnership Units in which a security interest is held simultaneously with the time at which such lender would be deemed to be a partner in the Partnership for purposes of allocating liabilities to such lender under Section 752 of the Code.
(e) Any Transfer in contravention of any of the provisions of this Article X shall be void and ineffectual and shall not be binding upon, or recognized by, the Partnership.
(f) Prior to the consummation of any Transfer under this Article X, the transferor and/or the transferee shall deliver to the General Partner such opinions, certificates and other documents as the General Partner shall request in connection with such Transfer.
10.3 Admission of Substitute Limited Partner.
(a) Subject to the other provisions of this Article X, an assignee of a Limited Partnership Interest (which shall be understood to include any purchaser, transferee, donee or other recipient of any disposition of such Limited Partnership Interest) shall be deemed admitted as a Limited Partner only upon the satisfactory completion of the following:
(i) the assignee shall have accepted and agreed to be bound by the terms and provisions of this Agreement by executing a counterpart or an amendment thereof, including a revised Exhibit A, and such other documents or instruments as the General Partner may require in order to effect the admission of such Person as a Limited Partner;
(ii) to the extent required, an amended Certificate evidencing the admission of such Person as a Limited Partner shall have been signed, acknowledged and filed for record in accordance with the Act;
(iii) the assignee shall have delivered a letter containing the representation set forth in Section 10.1(a) and the agreement set forth in Section 10.1(b);
(iv) if the assignee is a corporation, partnership or trust, the assignee shall have provided the General Partner with evidence satisfactory to counsel for the Partnership of the assignee’s authority to become a Limited Partner under the terms and provisions of this Agreement;
(v) the assignee shall have executed a power of attorney containing the terms and provisions set forth in Section 9.2;
(vi) the assignee shall have paid all legal fees and other expenses of the Partnership and the General Partner and filing and publication costs in connection with its substitution as a Limited Partner; and
(vii) the assignee shall have obtained the prior written consent of the General Partner to its admission as a Substitute Limited Partner, which consent may be given or denied in the exercise of the General Partner’s sole and absolute discretion.
(b) For the purpose of allocating Profits and Losses and distributing cash received by the Partnership, a Substitute Limited Partner shall be treated as having become, and appearing in the records of the Partnership as, a Partner upon the filing of the Certificate described in Section 10.3(a)(ii) or, if no such filing is required, the later of the date specified in the transfer documents or the date on which the General Partner has received all necessary instruments of transfer and substitution.
-36-
(c) The General Partner shall cooperate with the Person seeking to become a Substitute Limited Partner by preparing the documentation required by this Section 10.3 and making all official filings and publications. The Partnership shall take all such action as promptly as practicable after the satisfaction of the conditions in this Article X to the admission of such Person as a Limited Partner of the Partnership.
10.4 Rights of Assignees of Partnership Interests.
(a) Subject to the provisions of Sections 10.1 and 10.2, except as required by operation of law, the Partnership shall not be obligated for any purposes whatsoever to recognize the assignment by any Limited Partner of all or any portion of its Limited Partnership Interest until the Partnership has received notice thereof.
(b) Any Person who is the assignee of all or any portion of a Limited Partner’s Limited Partnership Interest, but who does not become a Substitute Limited Partner and desires to make a further assignment of such Limited Partnership Interest, shall be subject to all of the provisions of this Article X to the same extent and in the same manner as any Limited Partner desiring to make an assignment of its Limited Partnership Interest.
10.5 Effect of Bankruptcy, Death, Incompetence or Termination of a Limited Partner. The occurrence of an Event of Bankruptcy as to a Limited Partner, the death of a Limited Partner or a final adjudication that a Limited Partner is incompetent (which term shall include, but not be limited to, insanity) shall not cause the termination or dissolution of the Partnership, and the business of the Partnership shall continue if an order for relief in a bankruptcy proceeding is entered against a Limited Partner, the trustee or receiver of such Limited Partner’s estate or, if such Limited Partner dies, such Limited Partner’s executor, administrator or trustee, or, if such Limited Partner is finally adjudicated incompetent, such Limited Partner’s committee, guardian or conservator, and any such Person shall have the rights of such Limited Partner for the purpose of settling or managing such Limited Partner’s estate property and such power as the bankrupt, deceased or incompetent Limited Partner possessed to assign all or any part of such Limited Partner’s Limited Partnership Interests and to join with the assignee in satisfying conditions precedent to the admission of the assignee as a Substitute Limited Partner.
10.6 Joint Ownership of Interests. A Partnership Unit may be acquired by two (2) individuals as joint tenants with right of survivorship, provided, that such individuals either are married or are related and share the same personal residence. The written consent or vote of both owners of any such jointly-held Partnership Unit shall be required to constitute the action of the owners of such Partnership Unit; provided, however, that the written consent of only one joint owner will be required if the Partnership has been provided with evidence satisfactory to the counsel for the Partnership that the actions of a single joint owner can bind both owners under the applicable laws of the state of residence of such joint owners. Upon the death of one owner of a Partnership Unit held in a joint tenancy with a right of survivorship, the Partnership Unit shall become owned solely by the survivor as a Partner and not as an assignee. The Partnership need not recognize the death of one of the owners of a jointly held Partnership Unit until it shall have received notice of such death. Upon notice to the General Partner from either owner, the General Partner shall cause the Partnership Unit to be divided into two (2) equal Partnership Units, which shall thereafter be owned separately by each of the former joint owners.
-37-
ARTICLE XI
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
11.1 Books and Records. At all times during the continuance of the Partnership, the Partnership shall keep or cause to be kept at the Partnership’s specified office true and complete books of account maintained in accordance with generally accepted accounting principles, including (a) a current list of the full name and last-known business address of each Partner; (b) a copy of the Certificate and all certificates of amendment thereto; (c) copies of the Partnership’s federal, state and local income tax returns and reports; (d) copies of the Agreement and any financial statements of the Partnership for the three (3) most recent years; and (e) all documents and information required under the Act. Any Partner or its duly authorized representative, and any stockholder of the General Partner, upon paying the costs of collection, duplication and mailing, shall be entitled to inspect or copy such records during ordinary business hours.
11.2 Custody of Partnership Funds; Bank Accounts.
(a) All funds of the Partnership not otherwise invested shall be deposited in one or more accounts maintained in such banking or brokerage institutions as the General Partner shall determine, and withdrawals shall be made only on such signature or signatures as the General Partner may, from time to time, determine.
(b) All deposits and other funds not needed in the operation of the business of the Partnership may be invested by the General Partner in investment grade instruments (or investment companies whose portfolio consists primarily thereof), government obligations, certificates of deposit, bankers’ acceptances and municipal notes and bonds. The funds of the Partnership shall not be commingled with the funds of any other Person except for such commingling as may necessarily result from an investment in those investment companies permitted by this Section 11.2(b).
11.3 Fiscal and Taxable Year. The fiscal and taxable year of the Partnership shall be the calendar year, unless otherwise required by Section 706 of the Code.
11.4 Annual Tax Information and Report. The General Partner will use commercially reasonable efforts to supply to each person who was a Limited Partner at any time during such year, within one hundred eighty (180) days after the end of each fiscal year of the Partnership, the tax information necessary to file such Limited Partner’s individual tax returns as shall be reasonably required by law, and in all events the General Partner shall furnish such information within the time required by applicable law.
11.5 Tax Matters; Tax Elections; Special Basis Adjustments.
(a) The General Partner shall be the “Partnership Representative” within the meaning of Section 6223(a) of the Code, with respect to the Partnership (the “Partnership Representative”). The Partnership Representative shall be granted corresponding designation under any similar provisions of any state, local or non-United States tax laws. The Partnership Representative shall appoint a “designated individual” to act on behalf of the Partnership Representative. The Partnership Representative (and any designated individual) shall have all of the powers and duties assigned thereto under Sections 6221 through 6231 of the Code and any comparable provisions of state, local or non-United States law and is authorized to represent the Partnership (at the Partnership’s expense) in connection with all examinations of the Partnership’s
-38-
affairs by tax authorities (including any resulting administrative and judicial proceedings) and to expend Partnership funds for professional services reasonably incurred in connection therewith. Each Partner agrees to cooperate with the Partnership and the Partnership Representative and to do or refrain from doing any or all things reasonably requested by the Partnership or the Partnership Representative with respect to the conduct of such proceedings. With respect to any audit or other proceeding, the Partnership Representative shall be entitled to cause the Partnership (and any of its Subsidiaries) to make any available elections pursuant to Section 6226 of the Code (and similar provisions of state, local and non-United States law), and the Partners shall cooperate to the extent reasonably requested by the Partnership or the Partnership Representative in connection therewith, provided, that no Partner shall be required to file amended tax returns as a result of this Section 11.5(a). The Partnership shall reimburse the Partnership Representative for all reasonable out-of-pocket expenses incurred by the Partnership Representative, including reasonable fees of any professional attorneys, in carrying out its duties as the Partnership Representative. The provisions of this Section 11.5(a) shall survive the transfer or termination of any Partner’s interest in any Partnership Units, the termination of this Agreement and the termination of the Partnership, and shall remain binding on each Partner for the period of time necessary to resolve all tax matters relating to the Partnership and be subject to the provisions of the Tax Receivable Agreement, as applicable.
(b) Each Partner (or former Partner) agrees to indemnify the Partnership for any taxes (and related interest, penalties or other charges or expenses) payable by the Partnership and attributable to such Partner’s (or former Partner’s) interest in the Partnership, as determined by the General Partner. The foregoing obligation shall survive the withdrawal of any Partner and/or the dissolution and liquidation of the Partnership. Any taxes (and related interest, penalties or other charges or expenses) that are payable by the Partnership shall, to the extent attributable to a Partner’s (or former Partner’s) interest in the Partnership, be treated as distributed to such Partner.
(c) Subject to the other provisions of this Section 11.5 herein, all elections required or permitted to be made by the Partnership under the Code or any applicable state or local tax law shall be made by the General Partner in its sole and absolute discretion.
(d) The Partnership shall have in effect, and shall cause any subsidiary of the Partnership that is treated as a partnership for U.S. federal income tax purposes to have in effect, an election under Section 754 of the Code (and any corresponding election under state and local law) for the taxable year in which a redemption, transfer or exchange of the Partnership Units of any Partner occurs. Each Partner will furnish the Partnership with all information necessary to give effect to such election.
11.6 Reports to Limited Partners.
(a) As soon as practicable after the close of each fiscal quarter (other than the last quarter of the fiscal year), the General Partner shall cause to be mailed to each Limited Partner a quarterly report containing financial statements of the Partnership, or of the General Partner if such statements are prepared solely on a consolidated basis with the General Partner, for such fiscal quarter presented in accordance with generally accepted accounting principles. As soon as practicable after the close of each fiscal year, the General Partner shall cause to be mailed to each Limited Partner an annual report containing financial statements of the Partnership, or of the General Partner if such statements are prepared solely on a consolidated basis with the General Partner, for such fiscal year, presented in accordance with generally accepted accounting principles. The annual financial statements shall be audited by accountants selected by the General Partner.
-39-
(b) Any Partner shall further have the right to a private audit of the books and records of the Partnership, provided such audit is made for Partnership purposes and at the expense of the Partner desiring it, and it is made during normal business hours.
ARTICLE XII
AMENDMENT OF AGREEMENT; MEETINGS
12.1 Amendment.
(a) The written consent of both (i) the General Partner and (ii) the Limited Partners holding more than 50% of the Limited Partnership Units shall be required for any amendment, modification or waiver of any provision of this Agreement.
(b) Without limitation to Section 12.1(a), the following amendments shall additionally require the prior written consent of Limited Partners holding more than 50% of the then issued and outstanding Class A Limited Partnership Units:
(i) any amendment to Section 7.7 or Exhibit C during such time as such provisions remain in effect;
(ii) any other amendment that would adversely affect the rights and interests of, or expand the obligations of, the CIM Limited Partner or any holder of the Class A Limited Partnership Interests specifically; or
(iii) any amendment to this Section 12.1.
12.2 Meetings of Partners.
(a) The Partners may, but shall not be required to, hold any annual, periodic or other formal meetings. Meetings of the Partners may be called by the General Partner or by any Limited Partner or Limited Partners holding at least 10% of the Partnership Units in the Partnership.
(b) The Partner or Partners calling the meeting may designate any place within the State of Delaware as the place of meeting for any meeting of the Partners; and Partners holding at least a majority of the Partnership Units in the Partnership may designate any place outside the State of Delaware as the place of meeting for any meeting of the Partners. If no designation is made, or if a special meeting is called, the place of meeting shall be the principal place of business of the Partnership.
(c) Except as provided in Section 12.2(d), written notice stating the place, day and hour of the meeting and the purpose or purposes for which the meeting is called shall be delivered not less than ten (10) nor more than ninety (90) days before the date of the meeting, either personally or by mail, by or at the direction of the Partner or Partners calling the meeting, to each Partner entitled to vote at such meeting and to each Partner not entitled to vote who is entitled to notice of the meeting.
-40-
(d) Anything in this Agreement to the contrary notwithstanding, with respect to any meeting of the Partners, any Partner who in person or by proxy shall have waived in writing notice of the meeting, either before or after such meeting, or who shall attend the meeting in person or by proxy, shall be deemed to have waived notice of such meeting unless such Partner attends for the express purpose of objecting, at the beginning of the meeting, and does so object to the transaction of any business because the meeting is not lawfully called or convened.
(e) If all of the Partners shall meet at any time and place, either within or outside of the State of Delaware, in person or by proxy, and consent to the holding of a meeting at such time and place, such meeting shall be valid without call or notice, and at such meeting lawful action may be taken.
(f) For the purpose of determining Partners entitled to notice of or to vote at any meeting of Partners or any adjournment thereof, the date on which notice of the meeting is mailed shall be the record date. When a determination of Partners entitled to vote at any meeting of Partners has been made as provided in this Section 12.2(f), such determination shall apply to any adjournment thereof.
(g) Partners holding at least a majority of the Partnership Units entitled to vote at a meeting represented in person or by proxy, shall constitute a quorum at any meeting of Partners. In the absence of a quorum at any such meeting, Partners holding at least a majority of Partnership Units so represented may adjourn the meeting to another time and place. Any business that might have been transacted at the original meeting may be transacted at any adjourned meeting at which a quorum is present. No notice of an adjourned meeting need be given if the time and place are announced at the meeting at which the adjournment is taken unless the adjournment is for more than one hundred twenty (120) days. The Partners present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal during such meeting of that number of Partnership Units whose absence would cause less than a quorum to be present.
(h) If a quorum is present, the affirmative vote of Partners holding a majority of the Partnership Units entitled to vote, present in person or represented by proxy, shall be binding on all Partners, unless the vote of a greater or lesser proportion or number of Partnership Units or Partners, or the vote of certain specified Partners, is otherwise required by applicable law or by this Agreement. Unless otherwise expressly provided herein or required under applicable law, Partners who have an interest (economic or otherwise) in the outcome of any particular matter upon which the Partners’ vote or consent is required may vote or consent upon any such matter and their Partnership Units, vote or consent, as the case may be, shall be counted in the determination of whether the requisite matter was approved by the Partners.
(i) At all meetings of Partners, a Partner may vote in person or by proxy executed in writing by the Partner or by the Partner’s duly authorized attorney-in-fact. Such proxy shall be filed with the General Partner before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy.
(j) Action required or permitted to be taken at a meeting of Partners may be taken without a meeting if the action is evidenced by one or more written consents or approvals describing the action taken and signed by sufficient Partners or Partners holding sufficient Partnership Units, as the case may be, to approve such action had such action been properly voted on at a duly called meeting of the Partners. Action taken under this Section 12.2(j) is effective when the requisite Partners or Partners with the requisite Partnership Units, as the case may be, have signed the consent or approval, unless the consent specifies a different effective date.
-41-
ARTICLE XIII
MERGER, EXCHANGE OR CONVERSION
13.1 Merger, Exchange or Conversion of Partnership.
(a) The Partnership may, subject to the requirements of Section 7.7, (i) adopt a plan of merger and may merge with or into one or more domestic or foreign limited partnerships or other entities with the resulting entity being one or more surviving entities, (ii) adopt a plan of exchange by which a domestic or foreign limited partnership or other entity is to acquire all of the outstanding Partnership Units in exchange for cash, securities or other property of the acquiring domestic or foreign limited partnership or other entity or (iii) adopt a plan of conversion and convert to a foreign limited partnership or other entity. Any such plan of merger, plan of exchange, or plan of conversion shall otherwise comply with the requirements of this Agreement and the Act.
(b) Any merger pursuant to a plan of merger described in Section 13.1(a)(i) shall be conditioned upon the merger being permitted by the laws under which each other entity that is a party to the merger is incorporated or organized or by the constituent documents of such other entity that are not inconsistent with such laws. Any exchange pursuant to a plan of exchange described in Section 13.1(a)(ii) shall be conditioned upon the issuance of shares or other interests of the acquiring domestic or foreign limited partnership or other entity being permitted by the laws under which such domestic or foreign limited partnership or other entity is incorporated or organized or is not inconsistent with such laws. Any conversion pursuant to a plan of conversion described in Section 13.1(a)(iii) shall be conditioned upon such conversion being permitted by, or not inconsistent with, the laws of the jurisdiction in which the converted entity is to be incorporated, formed or organized and the incorporation, formation or organization of the converted entity is effected in compliance with such laws.
(c) Subject to the requirements of Section 7.7, the Partnership may adopt a plan of merger, plan of exchange or plan of conversion if the General Partner acts upon and the Limited Partners (if required by Section 13.2 below) approve the plan of merger, plan of exchange or plan of conversion in the manner prescribed in Section 13.2 below.
13.2 Approval of Plan of Merger, Exchange or Conversion.
(a) Except as provided by Section 13.2(g) below, after acting on a plan of merger, plan of exchange or plan of conversion in the manner prescribed by Section 13.2(b)(i), the General Partner shall submit the plan of merger, plan of exchange or plan of conversion for approval by the Limited Partners.
(b) Except as provided by Section 13.2(f) below, for a plan of merger, plan of exchange or plan of conversion to be approved:
(i) the General Partner shall adopt a resolution recommending that the plan of merger, plan of exchange or plan of conversion be approved by the Limited Partners, unless the General Partner determines that for any reason it should not make that recommendation, in which case the General Partner shall adopt a resolution directing that the plan of merger, plan of exchange or plan of conversion be submitted to the Limited Partners for approval without recommendation; and
(ii) the Limited Partners entitled to vote on the plan of merger, plan of exchange or plan of conversion must approve the plan as set forth in Section 13.2(e).
-42-
(c) The General Partner may condition its submission to the Limited Partners of a plan of merger, plan of exchange or plan of conversion, and the effectiveness of such plan, on any basis, including without limitation that a specified percentage of the Percentage Interests of the Limited Partners in excess of the threshold specified herein be required for the approval of the plan of merger, plan of exchange or plan of conversion.
(d) The General Partner shall notify each Limited Partner, whether or not entitled to vote, of the meeting of the Limited Partners at which the plan of merger, plan of exchange or plan of conversion is to be submitted for approval in accordance with this Section 13.2 and applicable law. The notice shall be given at least twenty (20) days before the meeting and shall state that the purpose, or one of the purposes, of the meeting is to consider the plan of merger, plan of exchange or plan of conversion and shall contain or be accompanied by a copy or summary of the plan. Any such approval may be by written consent of the requisite Limited Partners as would be required to approve the plan at any meeting where all the Limited Partners are present.
(e) Unless the General Partner (acting pursuant to Section 13.2(b)(ii)) requires a greater vote or the requirements in Section 7.7 are applicable (in which case the prior written consent of Limited Partners holding more than 50% of the then issued and outstanding Class A Limited Partnership Units shall be required), the vote of the Limited Partners required for approval of a plan of merger, plan of exchange or plan of conversion shall be the affirmative vote of the holders of more than 50% of the Limited Partnership Units entitled to vote thereon.
(f) Unless applicable law otherwise requires (in which case the approval of the Limited Partners shall continue to be required and the foregoing provisions of this Section 13.2 shall continue to apply), (i) approval by the Limited Partners on a plan of exchange shall not be required, and the foregoing provisions of this Section 13.2 do not apply, if the Partnership is the acquiring entity in the plan of exchange and (ii) approval by the Limited Partners on a plan of merger or a plan of conversion shall not be required and the foregoing provisions of this Section 13.2 do not apply, in each case, subject to the requirements of Section 7.7, if:
(i) a limited partnership is the sole surviving or resulting entity;
(ii) the partnership agreement of the surviving or resulting limited partnership will not materially differ from this Agreement before the merger or conversion in any manner other than as to applicable law or other insignificant conforming differences;
(iii) Limited Partners who held Limited Partnership Interests immediately before the effective date of the merger or conversion will hold interests in the surviving or resulting entity in the same proportions, immediately after the effective date of the merger or conversion; and
(iv) the General Partner adopts a resolution approving the plan of merger or plan of conversion.
(g) After a plan of merger, plan of exchange or plan of conversion is approved, and at any time before the merger, exchange or conversion has become effective, the plan of merger, plan of exchange or plan of conversion may be abandoned (subject to any contractual rights by any of the entities that are a party thereto), without action by the Limited Partners, in accordance with the procedures set forth in the plan of merger, plan of exchange or plan of conversion or, if no such procedures are set forth in the plan, in the manner determined by the General Partner.
-43-
13.3 Rights of Dissenting Limited Partners.
(a) In the absence of fraud in the transaction, the remedy provided by this Section 13.3 to a Limited Partner voting against any merger, exchange or conversion or objecting to a merger, exchange or conversion approved by the written consent of the Limited Partners (a “Dissenting Limited Partner”) is the exclusive remedy for the recovery of the value of its Partnership Units or money damages with respect to the transaction. If the existing, surviving or new corporation or limited partnership (foreign or domestic) or other entity, as the case may be, complies with the requirements of this Section 13.3, any Dissenting Limited Partner who fails to comply with the requirements of this Section 13.3 shall not be entitled to bring suit for the recovery of the value of its Limited Partnership Interests or money damages with respect to the transaction. A “Dissenting Limited Partner” in respect of any merger, exchange or conversion shall expressly exclude any Limited Partner who votes in favor of the related plan of merger, plan of exchange or plan of conversion or who abstains or fails to timely vote therefor. In the event of a plan of merger, plan of exchange or plan of conversion approved by written consent, a “Dissenting Limited Partner” in respect of any related merger, exchange or conversion shall expressly exclude Limited Partners who provide such written consent and Limited Partners who fail to object to the merger, exchange or conversion and demand payment for such Limited Partner’s Partnership Units in writing to the General Partner within twenty (20) days after notice to the Limited Partners of the receipt by the Partnership of written consents sufficient to approve such merger, exchange or conversion. All such Limited Partners who are not included within the definition of Dissenting Limited Partner in respect of any merger, exchange or conversion shall participate in the merger, exchange or conversion according to the approved plan of merger, plan of exchange or plan of conversion.
(b) Any Dissenting Limited Partner who has opted for payment for its Partnership Units shall not thereafter be entitled to vote or exercise any other rights of a Limited Partner except the right to receive payment for its Partnership Units and the right to maintain an appropriate action to obtain relief on the ground that the transaction would be or was fraudulent. Partnership Units of Dissenting Limited Partners for which payment has been made shall not thereafter be considered outstanding for the purposes of any subsequent vote of the Limited Partners.
(c) Within twenty (20) days after a Dissenting Limited Partner votes against any plan of merger, plan of exchange or plan of conversion which is approved by a vote of the Limited Partners, or in connection with a Limited Partner’s objection to any plan of merger, plan of exchange or plan of conversion approved by the written consent of the Limited Partners, the Dissenting Limited Partner may demand by written notice to the General Partner that payment for its Partnership Units be made. Upon receipt of such a payment demand, the General Partner shall (i) make a notation on the records of the Partnership that such demand has been made and (ii) within a reasonable period of time after the later of the receipt of a payment demand or the consummation of the merger, exchange or conversion, cause the Partnership to pay to the Dissenting Limited Partner the fair value of such Dissenting Limited Partner’s Partnership Units without interest. The fair value of a Dissenting Limited Partner’s Partnership Units shall be an amount equal to the Dissenting Limited Partner’s pro rata share (as would be determined under Section 5.3 if the Partnership were liquidating) of the appraised value of the net assets of the Partnership based on an appraisal of all assets of the Partnership from a Competent Independent Expert. The assets of the Partnership shall be appraised on a consistent basis. The appraisal shall
-44-
be based on an evaluation of all relevant information and shall include the current value of the Partnership’s assets as of the date immediately prior to the proposed merger, exchange or conversion. The appraisal shall assume an orderly liquidation of the Partnership’s assets over a twelve (12) month period, shall consider other balance sheet items and shall be net of the assumed cost of sale. The terms of the engagement of the appraiser shall clearly state that the engagement is for the benefit of the Partnership and its Limited Partners. A summary of the independent appraisal, including all material assumptions underlying the appraisal, shall be provided to Dissenting Limited Partners in connection with the payment of the fair value of their Partnership Units.
(d) If a Dissenting Limited Partner shall fail to make a payment demand within the period provided in Section 13.3(c) or, in respect of a plan of merger, plan of exchange or plan of conversion approved by written consent of the Limited Partners, shall fail to provide notice of dissent within the period set forth in Section 13.3(a), such Dissenting Limited Partner and all persons claiming under them shall be conclusively presumed to have approved and ratified the merger, conversion or exchange and shall be bound thereby, the right of such Dissenting Limited Partner to be paid the fair value of its Partnership Units shall cease, and such Dissenting Limited Partner’s status as a Limited Partner shall be restored without prejudice to any proceedings which may have been taken during the interim, and such Dissenting Limited Partner shall be entitled to receive any distributions made to Limited Partners in the interim.
ARTICLE XIV
GENERAL PROVISIONS
14.1 Notices. All communications required or permitted under this Agreement shall be in writing and shall be deemed to have been given when delivered personally or upon deposit in the United States mail, registered, postage prepaid return receipt requested, to the Partners at the addresses set forth in Exhibit A attached hereto; provided, however, that any Partner may specify a different address by notifying the General Partner in writing of such different address. Notices to the Partnership shall be delivered at or mailed to its specified office.
14.2 Survival of Rights. Subject to the provisions limiting transfers, this Agreement shall be binding upon and inure to the benefit of the Partners and the Partnership and their respective legal representatives, successors, transferees and assigns.
14.3 Additional Documents. Each Partner agrees to perform all further acts and execute, swear to, acknowledge and deliver all further documents that may be reasonable, necessary, appropriate or desirable to carry out the provisions of this Agreement or the Act.
14.4 Severability. If any provision of this Agreement shall be declared illegal, invalid or unenforceable in any jurisdiction, then such provision shall be deemed to be severable from this Agreement (to the extent permitted by law) and in any event such illegality, invalidity or unenforceability shall not affect the remainder.
14.5 Entire Agreement. This Agreement and exhibits attached hereto constitute the entire Agreement of the Partners and supersede all prior written agreements and prior and contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof, except as otherwise set forth herein.
-45-
14.6 Pronouns and Plurals. When the context in which words are used in the Agreement indicates that such is the intent, words in the singular number shall include the plural, and vice-versa, and the masculine gender shall include the neuter or female gender as the context may require.
14.7 Headings. The Article and Section headings in this Agreement are for convenience only and shall not be used in construing the scope of this Agreement or any particular Article or Section.
14.8 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original copy and all of which together shall constitute one and the same instrument binding on all parties hereto, notwithstanding that all parties shall not have signed the same counterpart.
14.9 Governing Law. This Agreement, and all actions (whether in contract, tort or statute) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be governed by, and enforced in accordance with, the Laws of the State of Delaware, including its statutes of limitations, without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction (whether of the State of Delaware or any other jurisdiction) would be required thereby.
14.10 Arbitration. Notwithstanding anything to the contrary contained in this Agreement, all claims, disputes and controversies between the parties hereto (including, without limitation, any claims, disputes and controversies between the Partnership and any one or more of the Partners and between or among any Partners) arising out of or in connection with this Agreement or the Partnership created hereby, or any act or failure to act by the General Partner or any other Partner hereunder, shall be resolved by binding arbitration in Los Angeles, California by the American Arbitration Association (the “AAA”), in accordance with this Section 14.10. Any arbitration called for by this Section 14.10 shall be conducted in accordance with the following procedures:
(a) The Partnership or any Partner (the “Requesting Party”) may demand arbitration pursuant to this Section 14.10 at any time by giving written notice of such demand (the “Demand Notice”) to all other Partners and (if the Requesting Party is not the Partnership) to the Partnership, which Demand Notice shall describe in reasonable detail the nature of the claim, dispute or controversy.
(b) Within fifteen (15) days after the giving of a Demand Notice or such additional time as required by the AAA, the AAA shall select and designate in writing three (3) reputable and disinterested individuals willing to act as an arbitrator of the claim, dispute or controversy in question.
(c) The presentations of the parties hereto in the arbitration proceeding shall be commenced and completed within sixty (60) days after the selection of the arbitration panel pursuant to clause (b) above, and the arbitration panel shall render its decision (and specify in reasonable detail its reasons therefor) in writing within thirty (30) days after the completion of such presentations. Any decision concurred in by any two (2) of the arbitrators shall constitute the decision of the arbitration panel, and unanimity shall not be required.
-46-
(d) The arbitration panel shall include in its decision a direction that all of the attorneys’ fees and costs of any party or parties and the costs of such arbitration be paid by the losing party or parties in the arbitration. On the application of a party before or after the initial decision of the arbitration panel, and proof of its attorneys’ fees and costs, the arbitration panel shall order the other party to make any payments directed pursuant to the preceding sentence.
Any decision rendered by the arbitration panel in accordance herewith shall be final and binding on the parties hereto, and judgment thereon may be entered by any state or federal court of competent jurisdiction. Arbitration shall be the exclusive method available for resolution of claims, disputes and controversies arising between and among the parties relating to this Agreement and the conduct of the parties hereto in relation to Partnership matters, and the Partnership and its Partners stipulate that the provisions of this Agreement shall be a complete defense to any suit, action or proceeding in any court or before any administrative or arbitration tribunal with respect to any such claim, controversy or dispute. The provisions of this Section 14.10 shall survive the dissolution of the Partnership.
Nothing contained herein shall be deemed to give the arbitrators any authority, power or right to alter, change, amend, modify, add to or subtract from any of the provisions of this Agreement.
14.11 Acknowledgement as to Exculpation and Indemnification. THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT CONTAINS EXCULPATION AND INDEMNIFICATION IN RESPECT OF THE ACTIONS OR OMISSIONS OF THE GENERAL PARTNER AND DIRECTORS, OFFICERS AND AFFILIATES OF THE GENERAL PARTNER BY THE PARTNERSHIP, EVEN IF SUCH ACTIONS OR OMISSIONS CONSTITUTE NEGLIGENCE OF SUCH PERSONS.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
-47-
IN WITNESS WHEREOF, the parties hereto have hereunder affixed their signatures to this Second Amended and Restated Agreement of Limited Partnership effective as of the date first above written.
GENERAL PARTNER:
CIM FINANCE HOLDINGS GP, LLC,
a Delaware limited liability company
| By: CIM Real Estate Finance Trust, Inc. |
| Its: Sole Member |
| /s/ Nathan DeBacker |
| Name: Nathan DeBacker |
| Title: Chief Financial Officer, Principal Accounting Officer and Treasurer |
[Signature Page to Second Amended and Restated Limited Partnership Agreement]
| CIM LIMITED PARTNER: |
| CIM GROUP HOLDINGS, LLC, a Delaware limited liability company |
| /s/ David Thompson |
| Name: David Thompson |
| Title: Vice President and Chief Financial Officer |
[Signature Page to Second Amended and Restated Limited Partnership Agreement]
| CMFT: |
| CIM REAL ESTATE FINANCE TRUST, INC., a Maryland corporation |
| /s/ Nathan DeBacker |
| Name: Nathan DeBacker |
| Title: Chief Financial Officer, Principal Accounting Officer and Treasurer |
[Signature Page to Second Amended and Restated Limited Partnership Agreement]
INDEX OF EXHIBITS
EXHIBIT A — Partners and Partnership Units
EXHIBIT B — Notice of Exercise of Exchange Right
EXHIBIT C — Consent Rights
EXHIBIT D — Definition of “Adjustment Factor” and Illustrative Calculations
EXHIBIT A
PARTNERS AND PARTNERSHIP UNITS
As of June 24, 2026
| Partners |
Partnership Units | |
| CMFT General Partner: | ||
| CIM Finance Holdings GP, LLC 2398 East Camelback Road, 4th Floor Phoenix, Arizona 85016 |
1 General Partnership Interest | |
| CIM Limited Partner: | ||
| CIM Group Holdings, LLC 4700
Wilshire Boulevard |
907,376,073.663 Class A Limited Partnership Units (821,175,346.665 Class A-1 Limited Partnership Units and 86,200,726.998 Class A-2 Limited Partnership Units) | |
| CMFT | ||
| CIM Real Estate Finance Trust, Inc. 2398 East Camelback Road, 4th Floor Phoenix, Arizona 85016 |
436,884,776.208 Class B Limited Partnership Units | |
A-1
EXHIBIT B
NOTICE OF EXERCISE OF EXCHANGE RIGHT
[Intentionally omitted.]
B-1
EXHIBIT C
CONSENT RIGHTS
| (a) | Issue or cause any Restricted Entity to issue any equity securities, provided that CMFT may issue, or may cause the Partnership to issue, in a single transaction or in a series of related transactions, equity securities that would in the aggregate be less than or equal to (x) 5% of the then total issued and outstanding CMFT Common Shares calculated on a fully diluted, as converted, exchanged or exercised basis (in the case of an issuance by CMFT of CMFT Common Shares) or (y) directly or indirectly (i.e., taking into account Partnership Units that will be indirectly owned by holders of any shares of CMFT Capital Stock being issued) 5% of the then issued and outstanding Partnership Units of the Partnership calculated on a fully diluted, as converted, exchanged or exercised basis (in the case of an issuance by CMFT or the Partnership), but only if, in each case of clauses (x) and (y), such equity securities have designations, preferences, rights, priorities or powers that are in all respects pari passu or less favorable than those provided to (A) holders of CMFT Common Shares (in the case of an issuance by CMFT) or (B) holders of Class A Limited Partnership Interests or Class B Limited Partnership Interests (in the case of an issuance by the Partnership); |
| (b) | Adopt any shareholder rights plan or similar agreements; |
| (c) | Amend the charter, articles of incorporation, bylaws, operating agreement, or other applicable corporate organizational, constituent and/or governing documents of any Restricted Entity; |
| (d) | Exchange or dispose of all or substantially all of the assets of any Restricted Entity in a single transaction or series of related transactions; |
| (e) | Enter into a merger, sale or other combination to which any Restricted Entity is a party (except for any Permitted Merger pursuant to Section 9.4(b)); |
| (f) | Transfer, mortgage, pledge, hypothecate or grant a security interest in all or substantially all of the assets of any Restricted Entity; |
| (g) | Appoint or remove (without cause) the Chief Executive Officer of CMFT (or the Person holding an equivalent officer position); |
| (h) | Terminate the employment of any officers of a Restricted Entity or terminate the association of a partner with the Partnership or any of the Partnership’s Subsidiaries, in each case, without cause; |
| (i) | Liquidate or dissolve any Restricted Entity; |
| (j) | Withdraw, remove or substitute any Person who serves as a general partner (including, for the avoidance of doubt, the General Partner) with respect to any Restricted Entity; |
| (k) | Transfer or cause to be transferred any beneficial ownership, in whole or in part, of any general partner interest with respect to any Restricted Entity (including, for the avoidance of doubt, the General Partnership Interest held by the General Partner and the Limited Partnership Interests held by CMFT) to any Person other than the CIM Limited Partner or its Permitted Transferees; or |
C-1
| (l) | Enter into any new business outside of the Partnership or any of its Subsidiaries or otherwise engage in, directly or indirectly, including through any Affiliate, any business or activities that are the same as, substantially similar to or competitive with the business of the Partnership or any of its Subsidiaries, or otherwise divert or reroute any business or opportunity from the Partnership or any of its Subsidiaries. |
C-2
EXHIBIT D
DEFINITION OF “ADJUSTMENT FACTOR”AND ILLUSTRATIVE CALCULATIONS
Definition of “Adjustment Factor”
“Adjustment Factor” means, with respect to any CMFT Capital Event, the following:
| (a) | In the case of a CMFT Capital Event that involves an issuance of shares of CMFT Capital Stock by CMFT, the quotient of: |
| (1) | the total number of issued and outstanding shares of CMFT Capital Stock (other than CMFT Voting Preferred Shares) after giving effect to such CMFT Capital Event divided by |
| (2) | the sum of: |
| i. | the total number of issued and outstanding shares of CMFT Capital Stock (other than CMFT Voting Preferred Shares) as of immediately prior to the consummation of such CMFT Capital Event plus: |
| ii. | the product of: |
| 1. | the number of shares of CMFT Capital Stock issued in such CMFT Capital Event multiplied by |
| 2. | (x) in the case of a CMFT Capital Event in which CMFT Capital Stock is issued in a financing transaction, the percentage of the gross proceeds to CMFT resulting from such financing contributed to the Partnership or the Partnership’s Subsidiaries, (y) in the case of a CMFT Capital Event in which CMFT Capital Stock is issued as consideration in an acquisition, merger or exchange transaction in which CMFT acquires assets or other properties from a third party, the percentage of such acquired assets or other properties contributed to the Partnership or the Partnership’s Subsidiaries, or (z) in the case of a CMFT Capital Event in which CMFT Capital Stock is issued to any director, employee or other service provider of CMFT, the Partnership or any of their respective Subsidiaries in consideration for services provided by such director, employee or other service provider, the percentage of such services provided solely for the benefit of the Partnership and its Subsidiaries (measured relative to the fair market value of the total services provided by such director, employee or other service provider for the benefit of CMFT, the Partnership and their respective Subsidiaries). |
D-1
| (b) | In the case of a CMFT Capital Event that involves a redemption, cancellation or other acquisition of shares of CMFT Capital Stock by CMFT, the quotient of: |
| (1) | the total number of issued and outstanding shares of CMFT Capital Stock (other than CMFT Voting Preferred Shares) after giving effect to such CMFT Capital Event divided by |
| (2) | the difference of: |
| i. | the total number of issued and outstanding shares of CMFT Capital Stock (other than CMFT Voting Preferred Shares) as of immediately prior to the consummation of such CMFT Capital Event minus: |
| ii. | the product of: |
| 1. | the number of shares of CMFT Capital Stock redeemed or otherwise acquired by CMFT in such CMFT Capital Event multiplied by |
| 2. | the percentage of the amount paid by CMFT to consummate such redemption, cancellation or other acquisition that is financed out of the cash balances or other assets of the Partnership or any of the Partnership’s Subsidiaries (including from the proceeds of any sale of assets or other properties of the Partnership or the Partnership’s Subsidiaries, or by means of any reimbursement by the Partnership or any of the Partnership’s Subsidiaries for any amounts so paid by CMFT). |
D-2
Illustrative Calculations
Set forth below are illustrative calculations of the operation of the Adjustment Factor under various hypothetical assumptions and scenarios pursuant to Sections 7.9 and 7.10 of this Agreement. Such examples are not intended to reflect actual transactions and shall not be deemed to modify, supplement or supersede the terms of this Agreement. In the event of any inconsistency between any illustrative example and the terms of this Agreement, the terms of this Agreement shall control. No party shall have any rights or obligations based on any such illustrative calculation or example.
*****
Hypothetical assumptions as of the Closing Date (as defined in the Contribution Agreement):
| • | CIM Limited Partner holds (1) 67 Class A Limited Partnership Units, (2) 67 CMFT Voting Preferred Shares, and (3) 67 CMFT Voting Preferred Share Votes. |
| • | CMFT holds 33 Class B Limited Partnership Units. |
| • | Stockholders of CMFT (other than the CIM Limited Partner) hold 33 CMFT Common Shares. |
Example #1: CMFT issues 3 CMFT Common Shares to third-party investor for $3, 100% of the proceeds of which are contributed to the Partnership.
| • | Total CMFT Common Shares post-transaction = 33 + 3 → 36 |
| • | Adjustment Factor = 36 ÷ (33 + (3 X 100%)) → 1.000 |
| • | Post-transaction: |
| • | CMFT Common Shares outstanding = 36 |
| • | Class B Limited Partnership Units outstanding = 36 |
| • | CMFT Voting Preferred Share Votes = 67 X 1.000 → 67 |
| • | Class A Limited Partnership Units outstanding = 67 X 1.000 → 67 |
Example #2: CMFT issues 3 CMFT Common Shares to third-party investor for $3, 0% of the proceeds of which are contributed to the Partnership.
| • | Total CMFT Common Shares post-transaction = 33 + 3 → 36 |
| • | Adjustment Factor = 36 ÷ (33 + (3 X 0%)) → ~1.0909 |
| • | Post-transaction: |
| • | CMFT Common Shares outstanding = 36 |
| • | Class B Limited Partnership Units outstanding = 36 |
| • | CMFT Voting Preferred Share Votes = 67 X 1.0909 → ~73 |
| • | Class A Limited Partnership Units outstanding = 67 X 1.0909 → ~73 |
Example #3: CMFT issues 3 CMFT Common Shares to third-party investor for $3, 50% of the proceeds of which are contributed to the Partnership.
| • | Total CMFT Common Shares post-transaction = 33 + 3 → 36 |
| • | Adjustment Factor = 36 ÷ (33 + (3 X 50%)) → ~1.0435 |
D-3
| • | Post-transaction: |
| • | CMFT Common Shares outstanding = 36 |
| • | Class B Limited Partnership Units outstanding = 36 |
| • | CMFT Voting Preferred Share Votes = 67 X 1.0435 → ~70 |
| • | Class A Limited Partnership Units outstanding = 67 X 1.0435 → ~70 |
Example #4: CMFT redeems 3 CMFT Common Shares for $3, funded 100% from the balance sheet of the Partnership.
| • | Total CMFT Common Shares post-transaction = 33 – 3 → 30 |
| • | Adjustment Factor = 30 ÷ (33 – (3 X 100%)) → 1.000 |
| • | Post-transaction: |
| • | CMFT Common Shares outstanding = 30 |
| • | Class B Limited Partnership Units outstanding = 30 |
| • | CMFT Voting Preferred Share Votes = 67 X 1.000 → 67 |
| • | Class A Limited Partnership Units outstanding = 67 X 1.000 → 67 |
Example #5: CMFT redeems 3 CMFT Common Shares for $3, funded 100% from the balance sheet of CMFT.
| • | Total CMFT Common Shares post-transaction = 33 – 3 → 30 |
| • | Adjustment Factor = 30 ÷ (33 – (3 X 0%)) → ~0.9091 |
| • | Post-transaction: |
| • | CMFT Common Shares outstanding = 30 |
| • | Class B Limited Partnership Units outstanding = 30 |
| • | CMFT Voting Preferred Share Votes = 67 X 0.9091 → ~61 |
| • | Class A Limited Partnership Units outstanding = 67 X 0.9091 → ~61 |
Example #6: CMFT redeems 3 CMFT Common Shares for $3, funded 50% from the balance sheet of CMFT and 50% from the balance sheet of the Partnership.
| • | Total CMFT Common Shares post-transaction = 33 – 3 → 30 |
| • | Adjustment Factor = 30 ÷ (33 – (3 X 50%)) → ~0.9524 |
| • | Post-transaction: |
| • | CMFT Common Shares outstanding = 30 |
| • | Class B Limited Partnership Units outstanding = 30 |
| • | CMFT Voting Preferred Share Votes = 67 X 0.9524 → ~64 |
| • | Class A Limited Partnership Units outstanding = 67 X 0.9524 → ~64 |
D-4
Exhibit 10.4
EXECUTION VERSION
TAX RECEIVABLE AGREEMENT
BY AND AMONG
CIM FINANCE HOLDINGS, LP
CIM REAL ESTATE FINANCE TRUST, INC.
AND
THE TRA PARTIES
DATED AS OF JUNE 24, 2026
Table of Contents
Page
| ARTICLE I | ||||||
| DEFINITIONS | ||||||
| Section 1.01. |
Definitions | 2 | ||||
| ARTICLE II | ||||||
| DETERMINATION OF REALIZED TAX BENEFIT | ||||||
| Section 2.01. |
Tax Assets Schedule | 10 | ||||
| Section 2.02. |
Tax Benefit Schedule | 10 | ||||
| Section 2.03. |
Procedures, Amendments | 10 | ||||
| ARTICLE III | ||||||
| TAX BENEFIT PAYMENTS | ||||||
| Section 3.01. |
Payments | 11 | ||||
| Section 3.02. |
No Duplicative Payments | 13 | ||||
| Section 3.03. |
Pro Rata Payments | 13 | ||||
| Section 3.04. |
Maximum Selling Price | 13 | ||||
| Section 3.05. |
Excess Payments | 13 | ||||
| ARTICLE IV | ||||||
| TERMINATION | ||||||
| Section 4.01. |
Early Termination and Breach of Agreement | 14 | ||||
| Section 4.02. |
Early Termination Notice | 15 | ||||
| Section 4.03. |
Payment upon Early Termination | 15 | ||||
| ARTICLE V | ||||||
| SUBORDINATION AND LATE PAYMENTS | ||||||
| Section 5.01. |
Subordination | 16 | ||||
| Section 5.02. |
Late Payments by PubCo | 16 | ||||
-i-
| ARTICLE VI | ||||||
| NO DISPUTES; CONSISTENCY; COOPERATION | ||||||
| Section 6.01. |
Participation in PubCo’s and Partnership’s Tax Matters | 16 | ||||
| Section 6.02. |
Consistency |
17 | ||||
| Section 6.03. |
Cooperation |
17 | ||||
| ARTICLE VII | ||||||
| MISCELLANEOUS | ||||||
| Section 7.01. |
Notices |
17 | ||||
| Section 7.02. |
Entire Agreement; No Third Party Beneficiaries |
19 | ||||
| Section 7.03. |
Successors; Assignment; Amendments |
19 | ||||
| Section 7.04. |
Counterparts |
20 | ||||
| Section 7.05. |
Reconciliation |
20 | ||||
| Section 7.06. |
Governing Law and Venue; Submission to Jurisdiction; Selection of Forum; Waiver of Trial by Jury |
21 | ||||
| Section 7.07. |
Withholding |
22 | ||||
| Section 7.08. |
Admission of PubCo into a Consolidated Group; Transfers of Corporate Assets |
22 | ||||
| Section 7.09. |
Confidentiality |
23 | ||||
| Section 7.10. |
Change in Law |
23 | ||||
| Section 7.11. |
Independent Nature of Rights and Obligations |
23 | ||||
| Section 7.12. |
Representative |
24 | ||||
| Section 7.13. |
Non-Recourse |
24 | ||||
| Section 7.14. |
Severability |
24 | ||||
| Section 7.15. |
Interpretation and Construction |
25 | ||||
-ii-
TAX RECEIVABLE AGREEMENT
This TAX RECEIVABLE AGREEMENT (this “Agreement”), dated as of June 24, 2026, is entered into by and among CIM Real Estate Trust Finance, Inc., a Maryland corporation (“PubCo”), CIM Finance Holdings, LP, a limited partnership formed under the laws of the State of Delaware (the “Partnership”), and each of the other undersigned parties (such other parties, along with each other party that from time to time executes a joinder agreement with respect to this Agreement, collectively, the “TRA Parties”).
RECITALS
WHEREAS, pursuant to that certain Contribution and Subscription Agreement, dated as of June 24, 2026 (the “Contribution Agreement”), by and among PubCo, the Partnership and CIM Group Holdings, LLC (“CIM Group Holdings”), pursuant to which CIM Group Holdings contributed to the Partnership all of the issued and outstanding limited liability company interests in CIM Group Management, LLC, a Delaware limited liability company (“CIM Group Management”) and all of the issued and outstanding limited liability company interests in CIM Group Investments, LLC, a Delaware limited liability company (“CIM Group Investments” and, together with CIM Group Management, the “CIM Group Entities”) (such contributions together, the “Contribution”) on the terms and subject to the conditions set forth in the Contribution Agreement and, in exchange therefor, was admitted as a Limited Partner (as defined in the Partnership LPA) in the Partnership and received Class A Limited Partnership Units;
WHEREAS, in connection with the consummation of the Contribution, on the date hereof, the parties entered into the Amended and Restated Limited Partnership Agreement of the Partnership, dated as of the date hereof (the “Partnership LPA”), pursuant to which, among other things, PubCo became the general partner of the Partnership;
WHEREAS, the TRA Parties were previously owners of the equity interests of the CIM Group Entities, and as a result of the Contribution, the TRA Parties hold or will hold Class A Units of the Partnership;
WHEREAS, pursuant to, and subject to the provisions of the Partnership LPA, and any other applicable documentation, each TRA Party has the right, following the listing of CMFT Common Shares (as defined in the Partnership LPA) on a national securities exchange, to require the Partnership to redeem all or a portion of such TRA Party’s Class A Units, which redemption would be effected, at PubCo’s election in its sole discretion, (i) for cash (to be paid by the Partnership) (a “Redemption”), or (ii) by PubCo effecting a direct exchange, including a “Permitted Merger” as defined in the Partnership LPA (a “Direct Exchange”) of CMFT Common Shares (or its successor, as the case may be) for such Class A Units;
WHEREAS, the Partnership and each member (including any future member) of the Partnership Group that is treated as a partnership for U.S. federal income tax purposes will have in effect an election under Section 754 of the Internal Revenue Code of 1986, as amended and as hereafter amended from time to time (the “Code”), for the Taxable Year that includes the date of the Contribution and for future Taxable Years;
WHEREAS, the income, gain, loss, deduction, expense or other Tax items of PubCo may be affected by the Tax Assets; and
WHEREAS, the parties to this Agreement desire to provide for certain payments and make certain arrangements with respect to the effect of the Tax Assets on the liability for Taxes of PubCo.
NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth in this Agreement, PubCo, the Partnership and the TRA Parties, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Except as otherwise indicated or if context otherwise requires, as used in this Agreement, the terms set forth in this Article I shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined). Capitalized terms used but not defined herein shall have the meanings given to such terms in the Partnership LPA:
“Actual Tax Liability” means, with respect to any Taxable Year, an amount, not less than zero, equal to the sum of (i) the actual liability for U.S. federal income Taxes of (x) PubCo for such Taxable Year and (y) without duplication, any member of the Partnership Group but only with respect to U.S. federal income Taxes imposed on such member of the Partnership Group and allocable to PubCo for such Taxable Year, and (ii) the product of (x) the U.S. federal taxable income of PubCo used in determining the amount described in clause (i) (which, for the avoidance of doubt, shall take into account the application of the proviso below) and (y) the Assumed State and Local Tax Rate; provided, that the liability for U.S. federal income Taxes of PubCo shall be calculated assuming that state and local income and franchise Taxes are not deductible by PubCo for U.S. federal income Tax purposes.
“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, Controls, or is Controlled by, or is under common Control with, such Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made; provided, that the TRA Parties shall not be treated as Affiliates of PubCo or Partnership for purposes of Section 7.09.
“Agreed Rate” means SOFR plus 100 basis points.
“Agreement” is defined in the Preamble.
“Amended Schedule” is defined in Section 2.03(b).
“Assumed State and Local Tax Rate” means, with respect to any Taxable Year, the Tax rate equal to (i) the sum of the product of (x) PubCo’s proportionate share of the Partnership’s income and franchise Tax apportionment factor(s) for each state and local jurisdiction (as applied for corporate entities) in which PubCo or Partnership files income or franchise Tax Returns for the
-2-
relevant Taxable Year and (y) the highest corporate income and franchise Tax rate(s) in effect for such Taxable Year for each such state and local jurisdiction, reduced by (ii) the product of (x) PubCo’s marginal U.S. federal income Tax rate for such Taxable Year and (y) the aggregate rate calculated under clause (i). Notwithstanding the foregoing, on or prior to the first day of any relevant Taxable Year, PubCo and the Representative may agree on an Assumed State and Local Tax Rate that will be used for the relevant Taxable Year, which rate shall be based on good faith estimates of expected apportionment rates for such Taxable Year and on the Tax rates in effect in relevant jurisdictions as of the first day of the relevant Taxable Year.
“Attributable” is defined in Section 3.01(b)(ii).
“Bankruptcy Code” means the Title 11, U.S. Code, as amended, or any similar federal, state or foreign law for the relief of debtors.
“Basis Adjustment” means the increase or decrease to the Tax basis of the Reference Assets under Section 732, 734(b), 743(b), 754, 755 or 1012 of the Code (and, in each case, any successor provision or comparable sections of federal, state, local or foreign Tax law) as a result of (i) any Exchange, (ii) any payments made pursuant to this Agreement and (iii) any actual distribution or deemed distribution by Partnership to any TRA Party. Notwithstanding any other provision of this Agreement, the amount of any Basis Adjustment resulting from an Exchange shall be determined without regard to any Pre-Exchange Transfer and as if any such Pre-Exchange Transfer had not occurred.
“Board” means the board of directors of PubCo.
“Business Day” means any day other than (a) a Saturday or a Sunday or (b) a day on which banking and savings and loan institutions are authorized or required by Law to be closed in New York City.
“Change of Control” means the occurrence of any of the following events occurring on or after the Closing Date:
| (i) | any Person or any group of Persons acting together that would constitute a “group” for purposes of Section 13(d) of the Exchange Act or any successor provisions thereto (excluding (x) a corporation or other entity owned, directly or indirectly, by the stockholders of PubCo in substantially the same proportions as their ownership of stock of PubCo and (y) the CIM Limited Partner (as defined in the Partnership LPA), or any of its Affiliates or any group of Persons in which the CIM Limited Partner or any of its Affiliates have beneficial ownership of more than 50% of the total voting power of such group)) is or becomes the beneficial owner, directly or indirectly, of securities of PubCo representing more than 50% of the combined voting power of PubCo’s then-outstanding voting securities; |
| (ii) | the following individuals cease for any reason to constitute a majority of the number of directors of PubCo then serving: individuals who, on the Closing Date, constitute the Board and any new director whose appointment or election by the Board or nomination for election by PubCo’s stockholders was approved |
-3-
| or recommended by a vote of at least a majority of the directors then still in office who either were directors on the Closing Date or whose appointment, election or nomination for election was previously so approved or recommended by the directors referred to in this clause (ii); |
| (iii) | there is consummated a merger or consolidation of PubCo with any other corporation or other entity, and, immediately after the consummation of such merger or consolidation, either (x) directors of PubCo immediately prior to the merger or consolidation do not constitute at least a majority of the members of the board of directors of the company surviving the merger or, if the surviving company is a Subsidiary, the ultimate parent thereof, or (y) the voting securities of PubCo immediately prior to such merger or consolidation do not continue to represent or are not converted into securities representing more than 50% of the combined voting power of the then outstanding voting securities of the Person resulting from such merger or consolidation or, if the surviving company is a Subsidiary, the ultimate parent thereof; or |
| (iv) | the stockholders of PubCo approve a plan of complete liquidation or dissolution of PubCo or there is consummated an agreement or series of related agreements for the sale or other disposition, directly or indirectly, of all or substantially all of the assets of PubCo and its Subsidiaries (on a consolidated basis), other than such sale or other disposition to an entity at least 50% of the combined voting power of the voting securities of which are owned by stockholders of PubCo in substantially the same proportions as their ownership of PubCo immediately prior to such sale. |
Notwithstanding the foregoing, a Change of Control shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of CMFT Capital Stock (as defined in the Partnership LPA) immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in and voting control over, and own substantially all of the shares of an entity, which owns all or substantially all of the assets of PubCo immediately following such transaction or series of transactions.
“Chosen Courts” is defined in Section 7.06(b).
“CIM Group Entities” is defined in the Recitals.
“CIM Group Holdings” is defined in the Recitals.
“CIM Group Investments” is defined in the Recitals.
“CIM Group Management” is defined in the Recitals.
“Class A Units” means equity interests in the Partnership that are designated as “Class A Limited Partnership Units” in the Partnership LPA.
“Closing Date” has the meaning ascribed to such term in the Contribution Agreement.
-4-
“Code” is defined in the Recitals.
“Contribution” is defined in the Recitals.
“Contribution Agreement” is defined in the Recitals.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ability to exercise voting power, by contract or otherwise; provided, however, that a natural person cannot be “controlled by” another Person.
“Cumulative Net Realized Tax Benefit” for a Taxable Year means the cumulative amount of Realized Tax Benefits for all Taxable Years of PubCo, up to and including such Taxable Year, net of the cumulative amount of Realized Tax Detriments for the same period. The Realized Tax Benefit and Realized Tax Detriment for each Taxable Year shall be based on the most recent Tax Benefit Schedules or Amended Schedules, if any, in existence at the time of such determination; provided, that, for the avoidance of doubt, the computation of the Cumulative Net Realized Tax Benefit shall be adjusted to reflect any applicable Determination with respect to any Realized Tax Benefits and/or Realized Tax Detriments.
“Default Rate” means SOFR plus 500 basis points.
“Determination” shall have the meaning ascribed to such term in Section 1313(a) of the Code or similar provision of state, local and foreign Tax law, as applicable, or any other event (including the execution of a Form 870-AD), including a settlement with the applicable Taxing Authority, that finally and conclusively establishes the amount of any liability for Tax.
“Direct Exchange” is defined in the Recitals.
“Early Termination Date” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment.
“Early Termination Notice” is defined in Section 4.02.
“Early Termination Payment” is defined in Section 4.03(b).
“Early Termination Rate” means the lesser of (i) 6.50% per annum, compounded annually, and (ii) SOFR plus 100 basis points.
“Early Termination Schedule” is defined in Section 4.02.
“Exchange” means (a) any Direct Exchange or (b) any Redemption.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Expert” is defined in Section 7.05.
-5-
“Hypothetical Federal Tax Liability” means, with respect to any Taxable Year, the hypothetical liability for U.S. federal income Taxes of (i) PubCo for such Taxable Year and (ii) without duplication, any member of the Partnership Group but only with respect to U.S. federal income Taxes imposed on such member of the Partnership Group and allocable to PubCo for such Taxable Year, in each case of clause (i) and (ii), calculated using the same methods, elections, conventions and similar practices used to compute the Actual Tax Liability on the relevant PubCo Return, but (x) calculated without taking into account any of the Tax Assets (including, for the avoidance of doubt, any carryforward or carryback of any Tax item attributable to the Tax Assets) and (y) assuming that state and local income and franchise Taxes are not deductible by PubCo for U.S. federal income Tax purposes.
“Hypothetical State and Local Tax Liability” means, with respect to any Taxable Year, the product of (i) the U.S. federal taxable income used in determining the Hypothetical Federal Tax Liability for such Taxable Year and (ii) the Assumed State and Local Tax Rate for such Taxable Year.
“Hypothetical Tax Liability” means, with respect to any Taxable Year, an amount, not less than zero, equal to the sum of the Hypothetical Federal Tax Liability for such Taxable Year and the Hypothetical State and Local Tax Liability for such Taxable Year.
“Imputed Interest” means any interest imputed under Section 1272, 1274 or 483 or other provision of the Code and any similar provision of state, local and foreign Tax law with respect to PubCo’s payment obligations under this Agreement.
“Independent Directors” means those members of the Board who are determined by the Board to satisfy the independence standard or standards most recently utilized by the Board for purposes of Item 407 of Regulation S-K, which standards are described in PubCo’s Annual Report on Form 10-K or proxy statement filed with the SEC for the most recent fiscal year.
“Interest Amount” is defined in Section 3.01(b)(iii).
“IRS” means the Internal Revenue Service.
“Market Value” means the Cash Amount, as defined in the Partnership LPA, determined as of the Early Termination Date (treating such Early Termination Date as a Specified Exchange Date, as defined in the Partnership LPA).
“Net Tax Benefit” is defined in Section 3.01(b)(i).
“Objection Notice” is defined in Section 2.03(a).
“Partnership” is defined in the Preamble.
“Partnership LPA” is defined in the Recitals.
“Partnership Group” means the Partnership and any direct or indirect subsidiary in which the Partnership owns a direct or indirect equity interest that is treated as a partnership or disregarded entity for U.S. federal income Tax purposes (but only to the extent such subsidiary is held directly or only through one or more entities that are treated as partnerships or disregarded entities) for purposes of the applicable Tax.
-6-
“Payment Date” means any date on which a payment is required to be made pursuant to this Agreement.
“Person” means an individual or any corporation, partnership, limited liability company, trust, unincorporated organization, association, joint venture or any other organization or entity, whether or not a legal entity.
“Pre-Exchange Transfer” means any direct or indirect transfer of one or more Class A Units or a distribution with respect to one or more Class A Units (or of or with respect to interests in another partnership, which interests were exchanged for Class A Units, or interests in any partnership that directly or indirectly owns Class A Units or an interest in any such other partnership) that occurs on or after the Closing Date but prior to an Exchange of such Class A Units, as applicable, and to which Section 743(b) of the Code applies. For the avoidance of doubt, a transaction that otherwise qualifies as a Pre-Exchange Transfer shall be treated as such with respect to an applicable TRA Party even if such TRA Party did not participate in such transaction.
“PubCo” is defined in the Preamble.
“PubCo Return” means the federal, state and/or local Tax Return, as applicable, of PubCo filed with respect to Taxes of any Taxable Year.
“Realized Tax Benefit” means, for a Taxable Year, the excess, if any, of the Hypothetical Tax Liability over the Actual Tax Liability, in each case using the “with or without” methodology by comparing (a) the actual liability for such Taxes for such Taxable Year, taking into account the Tax Assets, with (b) the Hypothetical Tax Liability. If all or a portion of the actual liability for such Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Benefit unless and until there has been a Determination.
“Realized Tax Detriment” means, for a Taxable Year, the excess, if any, of the Actual Tax Liability over the Hypothetical Tax Liability for such Taxable Year, in each case using the “with or without” methodology by comparing (a) the actual liability for such Taxes for such Taxable Year, taking into account the Tax Assets, with (b) the Hypothetical Tax Liability. If all or a portion of the actual liability for such Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.
“Reconciliation Dispute” is defined in Section 7.05.
“Reconciliation Procedures” means those procedures set forth in Section 2.03(a).
“Redemption” is defined in the Recitals.
“Reference Asset” means any tangible or intangible asset of Partnership (or any of its successors or assigns) and any asset held by any entities in which the Partnership owns a direct or indirect equity interest that are treated as a partnership or disregarded entity for U.S. federal income Tax purposes (but only to the extent such entities are held directly or only through other entities treated as partnerships or disregarded entities) for purposes of the applicable Tax, as of the relevant date. A Reference Asset also includes any asset the Tax basis of which is determined, in whole or in part, by reference to the Tax basis of an asset that is described in the preceding sentence, including “substituted basis property” within the meaning of Section 7701(a)(42) of the Code.
-7-
“Representative” means CIM Group Holdings.
“Schedule” means any of the following: (i) a Tax Assets Schedule; (ii) a Tax Benefit Schedule; or (iii) the Early Termination Schedule.
“SEC” means the Securities and Exchange Commission.
“Senior Obligations” is defined in Section 5.01.
“SOFR” means with respect to any day, the Secured Overnight Financing Rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark (or a successor administrator), on the Federal Reserve Bank of New York’s website. In no event will SOFR be less than 0%.
“Tax Asset” means, with respect to a TRA Party (and the Partnership Group), (i) Basis Adjustments and (ii) Imputed Interest. For the avoidance of doubt, Tax Assets shall include any carryforwards or similar attributes that are attributable to the Tax items described in clauses (i) and (ii).
“Tax Assets Schedule” is defined in Section 2.01.
“Tax Benefit Payment” is defined in Section 3.01(b).
“Tax Benefit Schedule” is defined in Section 2.02.
“Tax Return” means any return, declaration, report or similar statement required to be filed with respect to Taxes (including any attached schedules), including, without limitation, any information return, claim for refund, amended return and declaration of estimated Tax.
“Taxable Year” means a taxable year as defined in Section 441(b) of the Code or comparable section of state, local or foreign Tax law, as applicable (and, therefore, for the avoidance of doubt, may include a period of less than 12 months for which a Tax Return is made).
“Tax” or “Taxes” means any and all U.S. federal, state, local and foreign taxes, assessments or similar charges measured with respect to net income or profits and any interest related to such Tax.
“Taxing Authority” means any domestic, foreign, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising any taxing authority or any other authority exercising Tax regulatory authority.
“TRA Payment” is defined in Section 5.01.
-8-
“TRA Party” is defined in the Preamble.
“Treasury Regulations” means the Federal Income Tax Regulations, including temporary or proposed regulations, issued under the Code, as amended and as hereafter amended from time to time.
“Valuation Assumptions” shall mean, as of an Early Termination Date, the assumptions that:
| (i) | in each Taxable Year ending on or after such Early Termination Date, PubCo will have taxable income sufficient to fully utilize (x) the deductions arising from the Tax Assets (including, for the avoidance of doubt, Tax Assets that would result from future Tax Benefit Payments that would be paid in accordance with the Valuation Assumptions) during such Taxable Year or in the earliest future Taxable Year in which such deductions or other attributes would become available and (y) any loss or credit carryovers or carrybacks generated by deductions arising from Tax Assets that are available as of the date of such Early Termination Date that have not been previously utilized in determining a Tax Benefit Payment as of the date of such Early Termination Date; |
| (ii) | the U.S. federal income Tax rates and the state and local Tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other law as in effect on the Early Termination Date (and the Assumed State and Local Tax Rate will be calculated based on such rates and the apportionment factor applicable in such Taxable Year), except to the extent any change to such Tax rates for such Taxable Year has already been enacted into law (in which case such rates as enacted shall apply for purposes of this clause (ii)); |
| (iii) | any loss or credit carryovers or carrybacks generated by the Tax Assets and available as of the date of the Early Termination Schedule will be utilized by PubCo on a pro rata basis from the date of the Early Termination Schedule through the earlier of (x) the scheduled expiration date of such loss carryovers or carrybacks and (y) the fifteenth anniversary of the Early Termination Date; |
| (iv) | any non-amortizable, non-depreciable assets are deemed to be disposed of on the fifteenth anniversary of the Early Termination Date; provided that in the event of a Change of Control, such non-amortizable, non-depreciable assets shall be deemed disposed of at the time of sale (if applicable) of the relevant asset (if earlier than such fifteenth anniversary); |
| (v) | if, on the Early Termination Date, there are Class A Units that have not been Exchanged, then each such Class A Unit shall be deemed Exchanged for the Market Value that would be transferred if the Exchange occurred on the Early Termination Date; and |
| (vi) | any payment obligation pursuant to this Agreement will be satisfied on the date that any Tax Return to which such payment obligation relates is required to be filed, excluding any extensions. |
-9-
ARTICLE II
DETERMINATION OF REALIZED TAX BENEFIT
Section 2.01. Tax Assets Schedule. Within 120 calendar days after the filing of the U.S. federal income Tax Return of PubCo for each Taxable Year in which an Exchange has been effected, PubCo shall deliver to the Representative a schedule (the “Tax Assets Schedule”) that shows, in reasonable detail, (i) with respect to each Reference Asset in respect of which a Basis Adjustment arises from an Exchange effected during such Taxable Year, the Tax basis that such asset would have had as of each applicable date of such Exchange if no Basis Adjustment had been made, and (ii) the Tax Assets that are available for use by PubCo with respect to such Taxable Year with respect to each TRA Party that has effected an Exchange (such Tax Assets Schedule to include Basis Adjustments resulting from other Exchanges effected in the same Taxable Year and the periods over which such Basis Adjustments are amortizable or depreciable). All costs and expenses incurred in connection with the provision and preparation of the Tax Assets Schedules and Tax Benefit Schedules under this Agreement shall be borne by the Partnership. Each Tax Assets Schedule will become final as provided in Section 2.03(a) and may be amended pursuant to Section 2.03(b).
Section 2.02. Tax Benefit Schedule. Within 120 calendar days after the filing of the U.S. federal income Tax Return of PubCo for any Taxable Year in which there is a Realized Tax Benefit or Realized Tax Detriment while this Agreement is still in effect, PubCo shall provide to the Representative a schedule showing, in reasonable detail, the calculation of the Tax Benefit Payment for such Taxable Year in respect of each TRA Party that has effected an Exchange and the calculation of the Realized Tax Benefit or Realized Tax Detriment, and components thereof, for such Taxable Year (a “Tax Benefit Schedule”). Each Tax Benefit Schedule shall include a statement from PubCo to the effect that the computations reflected in the Tax Benefit Schedule have been made without regard to any transaction, election, or change in accounting method, in each case a significant purpose of which is to reduce or defer any Tax Benefit Payment (including any rates of interest hereunder). If PubCo determines that it is necessary to adjust any computations reflected in a Tax Benefit Schedule in order to provide the certification required by the preceding sentence, then PubCo will be permitted to make such adjustments in a manner reasonably acceptable to the Representative (and, for the avoidance of doubt, the amount of any Tax Benefit Payment reflected on this adjusted Tax Benefit Schedule shall be used for purposes of determining the corresponding Tax Benefit Payment and shall ignore any such transactions, elections, or changes in accounting method, in each case a significant purpose of which was to reduce or defer any Tax Benefit Payment). Each Tax Benefit Schedule will become final as provided in Section 2.03(a) and may be amended as provided in Section 2.03(b) (subject to the procedures set forth in Section 2.03(b)).
Section 2.03. Procedures, Amendments.
(a) Procedure. Each time PubCo delivers to the Representative a Schedule under this Agreement, including any Amended Schedule delivered pursuant to Section 2.03(b) and any Early Termination Schedule delivered pursuant to Section 4.02, PubCo shall also (x) except for any information that in the judgment of legal counsel of PubCo would result in the loss of attorney-client privilege or other privilege from disclosure or would conflict with any applicable
-10-
law or confidentiality obligations to which PubCo or any of its subsidiaries is bound, deliver to the Representative schedules and work papers, and any other information reasonably requested by the Representative, providing reasonable detail regarding the preparation of the Schedule and (y) allow the Representative reasonable access to the appropriate representatives at PubCo (at no cost to such representatives) in connection with a review of such Schedule. Without limiting the application of the preceding sentence, each time PubCo delivers to the Representative a Tax Benefit Schedule, in addition to the Tax Benefit Schedule duly completed, PubCo shall deliver to the Representative a reasonably detailed calculation of the applicable Hypothetical Tax Liability and a reasonably detailed calculation of the Actual Tax Liability, as well as any other work papers as determined by PubCo or reasonably requested by the Representative. Any applicable Schedule shall become final, non-appealable and binding on each TRA Party, PubCo and Partnership unless such TRA Party (i) within 30 calendar days after receiving such Schedule or amendment thereto, provides PubCo with notice of a material objection to such Schedule (an “Objection Notice”) or (ii) provides a written waiver of such right of any Objection Notice within the period described in clause (i) above, in which case such Schedule or amendment thereto becomes binding on the date the waiver is received by PubCo. If PubCo and the applicable TRA Party, for any reason, do not agree upon in writing the issues raised in such notice within 30 calendar days of receipt by PubCo of an Objection Notice, PubCo and such TRA Party shall employ the reconciliation procedures as described in Section 7.05 (the “Reconciliation Procedures”).
(b) Amended Schedule. The applicable Schedule for any Taxable Year may be amended from time to time by PubCo (such Schedule, an “Amended Schedule”) (i) in connection with a Determination affecting such Schedule, (ii) to correct material inaccuracies in the Schedule identified as a result of (x) the receipt of additional factual information relating to a Taxable Year or (y) a change in law having effect for a Taxable Year, in each case after the date the Schedule was provided to the Representative, (iii) to comply with the Expert’s determination under the Reconciliation Procedures, (iv) to reflect a material change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a carryback or carryforward of a loss or other tax item to such Taxable Year, (v) to reflect a material change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year or (vi) to adjust the Tax Assets Schedule to take into account payments made pursuant to this Agreement to the extent such payments could affect the Amended Schedule for that year. PubCo shall provide an Amended Schedule to the Representative within 90 calendar days of the occurrence of an event referenced in clauses (i) through (vi) of the preceding sentence.
ARTICLE III
TAX BENEFIT PAYMENTS
Section 3.01. Payments.
(a) Payments. Within five Business Days following a Tax Benefit Schedule delivered to the Representative becoming final in accordance with Section 2.03(a), PubCo shall pay, or cause to be paid, to each TRA Party for such Taxable Year the Tax Benefit Payment in respect of such TRA Party determined pursuant to Section 3.01(b) that is Attributable to the relevant TRA Party, if any. Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to a bank account of the applicable TRA Party previously designated by such TRA Party to PubCo or as otherwise agreed in writing by PubCo and the applicable TRA Party.
-11-
(b) A “Tax Benefit Payment” in respect of a TRA Party means an amount, not less than zero, equal to the sum of the Net Tax Benefit that is Attributable to such TRA Party and the Interest Amount with respect thereto.
(i) The “Net Tax Benefit” for a Taxable Year shall be an amount equal to the excess, if any, of 85% of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over the sum of the total amount of payments previously made under Section 3.01(b) (excluding payments attributable to Interest Amounts); provided, for the avoidance of doubt, no TRA Party shall be required to return any portion of any previously made Tax Benefit Payment and no TRA Party shall be required to make a payment to PubCo on account of a Realized Tax Detriment.
(ii) A Net Tax Benefit is “Attributable” to a TRA Party to the extent it is derived from a Tax Asset with respect to Class A Units that were Exchanged by such TRA Party.
(iii) The “Interest Amount” shall equal the interest on the Net Tax Benefit calculated at the Agreed Rate from the due date (without extensions) for filing the PubCo Return with respect to Taxes for such Taxable Year until the Payment Date. In the case of a Tax Benefit Payment made in respect of an Amended Schedule, the Interest Amount shall equal the interest on the Net Tax Benefit for such Taxable Year calculated at the Agreed Rate from the date of such Amended Schedule becoming final in accordance with Section 2.03(a) until the Payment Date. The Net Tax Benefit and the Interest Amount shall be determined separately with respect to each separate Exchange.
(iv) Notwithstanding the foregoing, if a Change of Control has occurred and the obligations of PubCo hereunder have not been accelerated under Section 4.01(c) in connection with such Change of Control, then for each Taxable Year ending on or after the date of a Change of Control, all Tax Benefit Payments, whether paid with respect to Class A Units that were Exchanged (x) prior to the date of such Change of Control or (y) on or after the date of such Change of Control, shall be calculated by utilizing the Valuation Assumptions in clauses (i), (iii) and (iv) of the definition thereof, substituting the phrase “the closing date of the Change of Control” in each place where the phrases “an Early Termination Date”, “such Early Termination Date”, and “the Early Termination Date” appear.
(c) The parties agree that (i) the payments made pursuant to this Agreement in respect of Basis Adjustments (to the extent permitted by applicable law and other than amounts accounted for as Interest Amounts) are intended to be treated and shall be reported for all purposes, including Tax purposes, as additional contingent consideration to the applicable TRA Parties in connection with the applicable Exchange that has the effect of creating additional Basis Adjustments in the Taxable Year of payment, (ii) any additional Basis Adjustments shall be incorporated into the calculation for the Taxable Year of the applicable payment and into the calculations for subsequent Taxable Years, as appropriate and (iii) the Actual Tax Liability for any Taxable Year shall take into account the deduction of the portion of the Tax Benefit Payment, if
-12-
any, that must be accounted for as an Interest Amount under applicable law; provided, however, that such liability for Taxes and such taxable income shall be included in the Hypothetical Tax Liability and the Actual Tax Liability, subject to the adjustments and assumptions set forth in this Agreement and, to the extent any such amount is taken into account on an Amended Schedule, such amount shall adjust a Tax Benefit Payment, as applicable, in accordance with Section 2.03(b).
Section 3.02. No Duplicative Payments. It is intended that the provisions of this Agreement will not result in duplicative payment of any amount (including interest) required under this Agreement. The provisions of this Agreement shall be construed in the appropriate manner as such intentions are realized.
Section 3.03. Pro Rata Payments. For the avoidance of doubt, to the extent (i) the aggregate tax benefit of PubCo’s deductions with respect to the Tax Assets is limited in a particular Taxable Year because PubCo does not have sufficient taxable income or (ii) PubCo lacks sufficient funds to satisfy its obligations to make all Tax Benefit Payments due in a particular Taxable Year, the limitation on the tax benefit for PubCo, or the Tax Benefit Payments that may be made, as the case may be, shall be taken into account or made for each applicable TRA Party in the same proportion as Tax Benefit Payments would have been made absent the limitations set forth in clauses (i) and (ii) of this Section 3.03, as applicable.
Section 3.04. Maximum Selling Price. The parties hereto acknowledge and agree that the timing, amounts, and aggregate value of Tax Benefit Payments pursuant to this Agreement are not reasonably ascertainable. Notwithstanding the previous sentence, upon the written request of the applicable TRA Party to PubCo, the parties shall use commercially reasonable efforts to cooperate in connection with any tax reporting of Tax Benefit Payments in connection with this Agreement, including that, if such TRA Party elects to use the installment method under Section 453 of the Code with respect to any Exchange and notifies PubCo of a stated maximum selling price (within the meaning of Treasury Regulations Section 15A.453-1(c)(2), as reasonably determined by such TRA Party) with respect to such Exchange, then the parties agree that the amount of consideration received in connection with such Exchange shall not exceed such stated maximum selling price.
Section 3.05. Excess Payments. To the extent PubCo makes a payment to a TRA Party in respect of a particular Taxable Year under Section 3.01(b) (taking into account Section 3.03) in an amount in excess of the amount of such payment that should have been made to the TRA Party in respect of such Taxable Year, then (i) the TRA Party shall not receive further payments under Section 3.01(b) until the TRA Party has foregone an amount of payments equal to such excess, and (ii) PubCo shall pay the amount of the TRA Party’s foregone payments to other TRA Parties (to the extent applicable) in a manner such that each of the other TRA Parties, to the extent possible, shall have received aggregate payments under Section 3.01(b) in the amount it would have received if there had been no excess payment to the TRA Party.
-13-
ARTICLE IV
TERMINATION
Section 4.01. Early Termination and Breach of Agreement.
(a) Upon the written approval of a majority of the Independent Directors of the Board, PubCo may terminate this Agreement with respect to all of the Class A Units held (or previously held and Exchanged) by all TRA Parties at any time by paying to all of the applicable TRA Parties (without duplication) (i) the Early Termination Payment, (ii) any Tax Benefit Payment due and payable but unpaid as of the date of the Early Termination Notice, and (iii) any Tax Benefit Payment due for the Taxable Year ending prior to, with or including the date of the Early Termination Notice; provided, however, that this Agreement shall terminate only upon the receipt of all such amounts by all TRA Parties; and provided, further, that PubCo may withdraw any notice to execute its termination rights under this Section 4.01(a) prior to the time at which any Early Termination Payment has been paid. Except as provided in Section 4.01(d), upon PubCo’s payment of all amounts due under this Section 4.01(a), neither the applicable TRA Parties nor PubCo shall have any further payment obligations under this Agreement.
(b) In the event that PubCo materially breaches this Agreement, whether as a result of failure to make any payment within 60 days after becoming due (except for all or a portion of such payment that is being validly disputed in good faith under this Agreement, and then only with respect to the amount in dispute), failure to honor any other material obligation required hereunder, but only after notice and 30 calendar days opportunity to cure, or by operation of law as a result of the rejection of this Agreement in a case commenced under the Bankruptcy Code, then, at the election of the Representative, all obligations hereunder shall be accelerated and such obligations shall be calculated as if an Early Termination Notice had been delivered on the date of such breach and PubCo shall pay to each applicable TRA Party (without duplication) (i) the Early Termination Payment, (ii) any Tax Benefit Payment due and payable but unpaid as of the date of such breach, and (iii) any Tax Benefit Payment due for the Taxable Year ending prior to, with or including the date of such breach. Notwithstanding the foregoing, in the event that PubCo breaches this Agreement, the Representative shall be entitled to elect on behalf of each of the TRA Parties to receive the amounts set forth in the foregoing clauses (i), (ii) and (iii) of this Section 4.01(b) or to seek specific performance of the terms hereof. For the avoidance of doubt, with respect to any amount that is the subject of a Reconciliation Dispute, such amount shall not be deemed to have become “due” for purposes of this Section 4.01(b) until the date that is five Business Days after the final resolution of such Reconciliation Dispute in accordance with Section 7.05 and the 60-day period referenced above shall commence on such date with respect to any amount determined to be owed pursuant to such resolution.
(c) PubCo hereby agrees to provide 20 calendar days’ prior written notice to the Representative of a Change of Control and unless otherwise agreed in writing by the Representative, all obligations hereunder shall be accelerated and such obligations shall be calculated as if an Early Termination Notice had been delivered on the date of such Change of Control and utilizing the Valuation Assumptions by substituting the phrase “the closing date of the Change of Control” in each place where the phrases “an Early Termination Date”, “such Early Termination Date”, and “the Early Termination Date” appear. For clarity, the Representative shall
-14-
have the sole authority on behalf of the TRA Parties to negotiate with PubCo to waive, in whole or in part, any Early Termination Payment, amend the provisions of this Agreement relating to Valuation Assumptions or the Early Termination Rate or take such other action that would alter the amount or timing of the Early Termination Payment, and no TRA Party may assert that any such waiver, amendment, modification, reduction, compromise or settlement shall give rise to any claim for breach of contract, fiduciary duty or similar cause of action. PubCo shall pay to each TRA Party (without duplication) (i) the Early Termination Payment calculated as if an Early Termination Notice had been delivered on the date of such Change of Control, (ii) any Tax Benefit Payment due and payable but unpaid as of the date of such Change of Control, and (iii) any Tax Benefit Payment due for the Taxable Year ending prior to, with or including the date of such Change of Control. If PubCo will not be the surviving company upon such Change of Control, PubCo agrees to cause the definitive documentation for such Change of Control to require the surviving or successor company to PubCo to satisfy PubCo’s obligations under this Agreement, including with respect to this Section 4.01(c), Section 4.02 and Section 4.03, and the Representative shall be entitled to seek specific performance of the terms hereof. For the avoidance of doubt, Section 4.02 and Section 4.03 shall apply to a Change of Control, mutatis mutandis.
(d) In the case of a termination pursuant to any of the foregoing paragraphs (a), (b) or (c) of this Section 4.01 as applicable, upon PubCo’s payment in full of all amounts due to each TRA Party, neither PubCo nor the applicable TRA Parties shall have any further payment obligations under this Agreement other than (i) any obligation of a TRA Party to reimburse the Representative for fees incurred on behalf of such TRA Party pursuant to Section 7.12 and (ii) any amounts owed in connection with any breach of this Agreement by PubCo. If an Exchange subsequently occurs with respect to Class A Units for which PubCo has paid the Early Termination Payment in full, PubCo shall have no obligations under this Agreement with respect to such Exchange.
Section 4.02. Early Termination Notice. If PubCo chooses to exercise its right of early termination under Section 4.01(a), or if the obligations under this Agreement are accelerated pursuant to Section 4.01(b) or Section 4.01(c), PubCo shall deliver, within 60 calendar days, to each TRA Party notice of such early termination (the “Early Termination Notice”) and contemporaneously with the Early Termination Notice a schedule (the “Early Termination Schedule”) showing in reasonable detail the calculation of the amounts due to each TRA Party as arising under Section 4.01(a), Section 4.01(b), or Section 4.01(c), as applicable. For the avoidance of doubt, the procedures set forth in Section 2.03(a) shall apply to the Early Termination Schedule delivered under Section 4.01(a), (b) or (c), as applicable.
Section 4.03. Payment upon Early Termination.
(a) Within five Business Days after agreement between the applicable TRA Party and PubCo of the Early Termination Schedule, PubCo shall pay to the applicable TRA Party an amount equal to the sum of the amounts arising under Section 4.01(a), Section 4.01(b) or Section 4.01(c) as applicable. Such payment shall be made by wire transfer of immediately available funds to a bank account designated by the applicable TRA Party or as otherwise agreed in writing by PubCo and the applicable TRA Party.
-15-
(b) The “Early Termination Payment” for any TRA Party, as of the date of the delivery of an Early Termination Schedule, shall equal with respect to the applicable TRA Party the present value, discounted at the Early Termination Rate as of such date, of all Tax Benefit Payments that would be required to be paid by PubCo to the applicable TRA Party beginning from the Early Termination Date assuming the Valuation Assumptions are applied.
ARTICLE V
SUBORDINATION AND LATE PAYMENTS
Section 5.01. Subordination. Notwithstanding any other provision of this Agreement to the contrary, any Tax Benefit Payment or Early Termination Payment required to be made by PubCo to the applicable TRA Party under this Agreement (a “TRA Payment”) shall rank subordinate and junior in right of payment to any principal, interest or other amounts due and payable in respect of any obligations in respect of indebtedness for borrowed money of PubCo (“Senior Obligations”) and shall rank pari passu with all current or future unsecured obligations of PubCo that are not Senior Obligations. To the extent PubCo incurs, creates or assumes any Senior Obligations after the date hereof, PubCo shall make reasonable efforts to ensure that such indebtedness permits the amounts payable hereunder to be paid. PubCo shall not enter into any agreement if a principal purpose of such agreement is to restrict in any material respect the amounts payable hereunder.
Section 5.02. Late Payments by PubCo. The amount of all or any portion of any Tax Benefit Payment, Early Termination Payment or other payment under this Agreement not made to the applicable TRA Party when due under the terms of this Agreement shall be payable together with any interest thereon, computed at the Default Rate and commencing from the date on which such Tax Benefit Payment, Early Termination Payment or other payment under this Agreement was due and payable.
ARTICLE VI
NO DISPUTES; CONSISTENCY; COOPERATION
Section 6.01. Participation in PubCo’s and Partnership’s Tax Matters. Except as otherwise provided herein or in the Contribution Agreement or the Partnership LPA, PubCo shall have full responsibility for, and sole discretion over, all Tax matters concerning PubCo and Partnership, including, without limitation, the preparation, filing or amending of any Tax Return of PubCo or Partnership and defending, contesting or settling any issue pertaining to Taxes. Notwithstanding the foregoing, PubCo shall notify the Representative of, and keep the Representative reasonably informed with respect to the portion of any audit, examination or proceeding relating to Tax matters of PubCo or Partnership by a Taxing Authority the outcome of which is reasonably expected to affect any TRA Payment, and shall provide to the Representative reasonable opportunity to participate in such audit, examination or proceeding and to provide information and other input (in each case, at the Representative’s expense) to PubCo, Partnership and their respective advisors concerning the conduct of any such portion of such audit, examination or proceeding; provided that PubCo shall not, and shall cause Partnership not to, settle, compromise or otherwise resolve any such audit, examination or proceeding without the prior
-16-
written consent of the Representative (such consent not to be unreasonably withheld, conditioned or delayed) if such settlement, compromise or resolution is reasonably expected to materially affect any TRA Payments (including the amount or timing of payments made under this Agreement). The consent of the Representative shall be deemed granted absent their written objection communicated to PubCo within ten (10) Business Days following written notice of any pending settlement, compromise or resolution.
Section 6.02. Consistency. Unless otherwise required by law, PubCo and the TRA Parties agree to report and cause to be reported for all purposes, including federal, state, local and foreign Tax purposes and financial reporting purposes, all Tax-related items (including, without limitation, the Basis Adjustment, the Tax Assets, and each Tax Benefit Payment) in a manner consistent with that specified in any Schedule required to be provided by or on behalf of PubCo under this Agreement.
Section 6.03. Cooperation. The TRA Parties shall (a) furnish to PubCo in a timely manner such information, documents and other materials as PubCo may reasonably request for purposes of making any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or proceeding with any Taxing Authority, (b) make themselves available to PubCo and its representatives to provide explanations of documents and materials and such other information as PubCo or its representatives may reasonably request in connection with any of the matters described in clause (a) above, and (c) reasonably cooperate in connection with any such matter. The Partnership shall reimburse an applicable TRA Party for any reasonable third-party costs and expenses incurred pursuant to this Section 6.03. PubCo shall not, without the prior written consent of the Representative, take any action that has the principal purpose of circumventing the achievement or attainment of any Tax Benefit Payment or Early Termination Payment under this Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Notices. All notices and other communications to be given or made hereunder shall be in writing and shall be deemed to have been duly given or made on the date of delivery to the recipient thereof if received prior to 5:00 p.m. in the place of delivery and such day is a Business Day (or otherwise on the next succeeding Business Day) if (a) served by personal delivery or by an internationally recognized overnight courier to the Person or entity for whom it is intended, (b) delivered by registered or certified mail, return receipt requested, or (c) when sent to the recipient by electronic transmission (provided, that, no failure message is generated) to the e-mail address specified below:
If to PubCo or the Partnership, to:
CIM Real Estate Finance Trust, Inc.
2398 East Camelback Road, 4th Floor
Phoenix, AZ 85016
Attn: David Thompson
Email: [email protected]
-17-
With a copy to (which shall not constitute notice):
Taft Stettinius & Hollister LLP
3343 Peachtree Road NE
Atlanta, GA 30326
Attn: Lauren B. Prevost; Seth Weiner
Email: [email protected]; [email protected]
If to CIM Group Holdings (in its capacity as a TRA Party) or to CIM Group Holdings otherwise:
CIM Group
4700 Wilshire Boulevard
Los Angeles, CA 90010
Attn: Avraham Shemesh
Email: [email protected]
With a copy to (which shall not constitute notice):
Sullivan & Cromwell LLP
1888 Century Park East
Los Angeles, CA 90067
Attn: Patrick S. Brown
Email: [email protected]
If to the Representative, to:
CIM Group
4700 Wilshire Boulevard
Los Angeles, CA 90010
Attn: Avraham Shemesh
Email: [email protected]
With a copy to (which shall not constitute notice to the Representative):
Sullivan & Cromwell LLP
1888 Century Park East
Los Angeles, CA 90067
Attn:Patrick S. Brown
Email:[email protected]
If to any TRA Party, to the street address and email address set forth for such TRA Party in the records of the Partnership.
-18-
Section 7.02. Entire Agreement; No Third Party Beneficiaries. This Agreement, the Contribution Agreement, and the Partnership LPA constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all prior and contemporaneous agreements, negotiations, understandings, and representations and warranties, whether oral or written, with respect to such matters. The parties hereby agree that this Agreement is solely for the benefit of the parties on the terms and subject to the conditions set forth in this Agreement, and this Agreement is not intended to, and does not, confer upon any Person other than the parties and their respective successors, legal representatives and permitted assigns any rights or remedies, express or implied, hereunder.
Section 7.03. Successors; Assignment; Amendments.
(a) With the prior written consent of PubCo (such consent not to be unreasonably withheld, conditioned or delayed), each TRA Party may assign any of its rights under this Agreement in whole or in part to any Person as long as such transferee has executed and delivered, or, in connection with such transfer, executes and delivers, a joinder to this Agreement, in form reasonably satisfactory to PubCo, agreeing to become a TRA Party for all purposes of this Agreement, except as otherwise provided in such joinder. Notwithstanding the foregoing, (i) to the extent that a TRA Party effectively transfers Class A Units after the date hereof in accordance with the terms of the Partnership LPA, and any other agreements the TRA Parties may have entered into with each other or a TRA Party may have entered into with PubCo and/or the Partnership, the transferring TRA Party shall have the option to assign, without the approval of PubCo (but subject to written notice to PubCo), to the transferee of such Class A Units the TRA Party’s rights and obligations under this Agreement with respect to such transferred Class A Units, (ii) if a TRA Party transfers Class A Units in accordance with the terms of the Partnership LPA but does not assign to the transferee of such Class A Units its rights and obligations under this Agreement with respect to such transferred Class A Units, (x) such TRA Party shall remain a TRA Party under this Agreement for all purposes, including with respect to the receipt of Tax Benefit Payments to the extent payable hereunder, and (y) the transferee of such Class A Units shall not be a TRA Party; provided that for all purposes of this Agreement, any subsequent Exchange of Class A Units by such transferee shall be treated as if such Exchange had been effected with respect to such applicable TRA Party that retained the rights hereunder even if such TRA Party did not participate in such transaction. Once any Exchange has occurred, any and all payments that may become payable to a TRA Party pursuant to this Agreement with respect to such Exchange may be assigned to any Person or Persons.
(b) No provision of this Agreement may be amended unless such amendment is approved in writing by (i) a majority of the Independent Directors of the Board and (ii) the TRA Parties who would be entitled to receive at least two-thirds of the Early Termination Payments payable to all TRA Parties hereunder if PubCo had exercised its right of early termination on the date of the most recent Exchange prior to such amendment (excluding, for purposes of this sentence, all payments made to any TRA Party pursuant to this Agreement since the date of such most recent Exchange); provided that no such amendment shall be effective, if such amendment will have a disproportionate adverse effect on the payments that applicable TRA Parties will or may receive under this Agreement, without such TRA Parties’ consent in writing to such amendment.
-19-
(c) All of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties and their respective successors, assigns, heirs, executors, administrators and legal representatives. PubCo shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of PubCo, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that PubCo would be required to perform if no such succession had taken place. For the avoidance of doubt, the failure of PubCo to cause any such successor expressly to assume and agree to perform this Agreement in writing prior to or concurrently with the consummation of any such succession transaction shall constitute a material breach of PubCo’s obligations under this Agreement for purposes of Section 4.01(b), entitling the Representative to exercise the remedies set forth therein. Notwithstanding anything to the contrary herein, in the event a TRA Party transfers its Class A Units as permitted under Section 10.2 of the Partnership LPA, excluding to any other TRA Party, such TRA Party shall have the right, on behalf of such transferee, to enforce the provisions of Section 2.03, Section 4.02 or Section 6.01 with respect to such transferred Class A Units.
(d) No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement, or to exercise any right or remedy consequent upon a breach thereof, shall constitute a waiver of any such breach or any other covenant, duty, agreement or condition.
Section 7.04. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.
Section 7.05. Reconciliation. In the event that PubCo and the applicable TRA Party are unable to resolve a disagreement with respect to the matters governed by Section 2.03 or Section 4.02 within the relevant period designated in and in accordance with the term of any other section of this Agreement (such dispute, a “Reconciliation Dispute”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “Expert”) in the particular area of disagreement mutually acceptable to both parties. If the parties are unable to agree on an Expert within 15 calendar days of the commencement of a Reconciliation Dispute, the Expert shall be appointed by the International Chamber of Commerce Centre for Expertise. The Expert shall be a partner or principal in a nationally recognized accounting firm or a law firm, and, unless the applicable TRA Party and PubCo agree otherwise, the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with Partnership, PubCo, the Representative or the applicable TRA Parties or other actual or potential conflict of interest. The Expert shall resolve any matter relating to the Tax Assets Schedule or an amendment thereto or the Early Termination Schedule or an amendment thereto within 30 calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within 15 calendar days or as soon thereafter as is reasonably practicable, in each case after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement is due or any Tax Return reflecting the subject of a disagreement is due, such payment shall be made on the date prescribed by this Agreement and such Tax Return may be filed as prepared by PubCo, subject to adjustment or amendment upon resolution. The costs and expenses relating to the engagement of such Expert or amending any Tax Return shall be borne by PubCo, except as provided in the next sentence. PubCo and each applicable TRA Party shall bear their own costs and expenses of such proceeding, unless (i) the Expert adopts the TRA Party’s position, in which case PubCo shall reimburse the TRA Party for any reasonable out-of-pocket costs and expenses with respect to such proceeding, or (ii) the Expert
-20-
adopts PubCo’s position, in which case the TRA Party shall reimburse PubCo for any reasonable out-of-pocket costs and expenses with respect to such proceeding. Any dispute as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.05 shall be decided by the Expert. The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.05 shall be binding on PubCo, the Representative and the applicable TRA Party and may be entered and enforced in any court having jurisdiction.
Section 7.06. Governing Law and Venue; Submission to Jurisdiction; Selection of Forum; Waiver of Trial by Jury.
(a) SUBJECT TO Section 7.05, THIS AGREEMENT AND ALL PROCEEDINGS AGAINST ANY PARTY IN CONNECTION WITH, ARISING OUT OF OR OTHERWISE RELATING TO THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED, GOVERNED BY, AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, INCLUDING ITS STATUTES OF LIMITATIONS, WITHOUT REGARD TO ANY BORROWING STATUTE THAT WOULD RESULT IN THE APPLICATION OF THE STATUTE OF LIMITATIONS OF ANY OTHER JURISDICTION OR THE CONFLICTS OF LAWS PROVISIONS, RULES OR PRINCIPLES THEREOF (OR ANY OTHER JURISDICTION) TO THE EXTENT THAT SUCH PROVISIONS, RULES OR PRINCIPLES WOULD DIRECT A MATTER TO ANOTHER JURISDICTION.
(b) Each of the parties agrees that: (i) it shall bring any proceeding in connection with, arising out of or otherwise relating to this Agreement, any instrument or other document delivered pursuant to this Agreement exclusively in the courts of the State of Delaware in the Court of Chancery of the State of Delaware, or (and only if) such court finds it lacks subject matter jurisdiction, the Superior Court of the State of Delaware (Complex Commercial Division); provided that if subject matter jurisdiction over the proceeding is vested exclusively in the United States federal courts, such proceeding shall be heard in the United States District Court for the District of Delaware (the “Chosen Courts”); and (ii) solely in connection with such proceedings, (A) it irrevocably and unconditionally submits to the exclusive jurisdiction of the Chosen Courts, (B) it waives any objection to the laying of venue in any proceeding in the Chosen Courts, (C) it waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party, (D) mailing of process or other papers in connection with any such proceeding in the manner provided in Section 7.01 or in such other manner as may be permitted by applicable law shall be valid and sufficient service thereof and (E) it shall not assert as a defense any matter or claim waived by the foregoing clauses (A) through (D) of this Section 7.06(b) or that any governmental order issued by the Chosen Courts may not be enforced in or by the Chosen Courts.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY BE IN CONNECTION WITH, ARISE OUT OF OR OTHERWISE RELATE TO THIS AGREEMENT, ANY INSTRUMENT OR OTHER DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY PROCEEDING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, ARISING OUT OF OR OTHERWISE RELATING TO THIS AGREEMENT, ANY
-21-
INSTRUMENT OR OTHER DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT. EACH PARTY HEREBY ACKNOWLEDGES AND CERTIFIES (i) THAT NO REPRESENTATIVE OF THE OTHER PARTIES HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTIES WOULD NOT, IN THE EVENT OF ANY ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) IT MAKES THIS WAIVER VOLUNTARILY AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS, ACKNOWLEDGMENTS AND CERTIFICATIONS CONTAINED IN THIS Section 7.06(c).
Section 7.07. Withholding. PubCo shall be entitled to deduct and withhold from any payment payable pursuant to this Agreement such amounts as PubCo is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign Tax law; provided, however, that PubCo shall notify the Representative in advance before applying any such withholding to allow the applicable TRA Party a reasonable opportunity to provide any applicable forms, certificates or other materials that would eliminate or reduce such withholding, and PubCo will otherwise reasonably cooperate with the applicable payee to eliminate or reduce such withholding. To the extent that amounts are so withheld and paid over to the appropriate Taxing Authority by PubCo, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the applicable TRA Party. Each TRA Party shall promptly provide PubCo, Partnership or other applicable withholding agent with any applicable Tax forms and certifications (including IRS Form W-9 or the applicable version of IRS Form W-8) reasonably requested and shall promptly provide an update of any such Tax form or certificate previously delivered if the same has become incorrect or has expired.
Section 7.08. Admission of PubCo into a Consolidated Group; Transfers of Corporate Assets.
(a) If PubCo becomes a member of an affiliated or consolidated group of corporations that files a consolidated income Tax Return pursuant to Sections 1501 et seq. of the Code or any corresponding provisions of state, local or foreign law, then: (i) the provisions of this Agreement shall be applied with respect to such group as a whole; and (ii) Tax Benefit Payments, Early Termination Payments and other applicable items hereunder shall be computed with reference to the consolidated taxable income of such group as a whole.
(b) If any entity that is obligated to make a TRA Payment hereunder transfers one or more assets to a corporation with which such entity does not file a consolidated Tax Return pursuant to Section 1501 of the Code, such entity, for purposes of calculating the amount of any TRA Payment (e.g., calculating the gross income of the entity and determining the Realized Tax Benefit of such entity) due hereunder, shall be treated as having disposed of such asset in a fully taxable transaction on the date of such contribution. The consideration deemed to be received by such entity shall be equal to the fair market value of the contributed asset, plus (i) the amount of debt to which such asset is subject, in the case of a contribution of an encumbered asset or (ii) the amount of debt allocated to such asset, in the case of a contribution of a partnership interest.
-22-
Section 7.09. Confidentiality. Each TRA Party and assignee acknowledges and agrees that the information of PubCo and its Affiliates is confidential and, except in the course of performing any duties as necessary for PubCo and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, shall keep and retain in the strictest confidence and not disclose to any Person all confidential matters, acquired pursuant to this Agreement, of PubCo or any Person included within PubCo’s Affiliates and successors and the other TRA Parties. This Section 7.09 shall not apply to (i) any information that has been made publicly available by PubCo or any of its Affiliates, becomes public knowledge (except as a result of an act of such TRA Party in violation of this Agreement) or is generally known to the business community, (ii) any information that any TRA Party is permitted to access pursuant to any other applicable agreement or arrangement and that such TRA Party is permitted to disclose pursuant to the terms of any other such applicable agreement or arrangement and (iii) the disclosure of information to the extent necessary for a TRA Party to prepare and file its Tax Returns, to respond to any inquiries regarding the same from any Taxing Authority or to prosecute or defend any action, proceeding or audit by any Taxing Authority with respect to such returns. Notwithstanding anything to the contrary herein, each TRA Party (and each employee, representative or other agent of such TRA Party) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of (x) PubCo and (y) any of its transactions, and all materials of any kind (including opinions or other tax analyses) that are provided to the TRA Parties relating to such tax treatment and tax structure.
Section 7.10. Change in Law. Notwithstanding anything herein to the contrary, if, as a result of, or in connection with an actual or proposed change in Tax law, a TRA Party reasonably believes that the existence of this Agreement could have material adverse Tax consequences to such TRA Party or any direct or indirect owner of such TRA Party, then at the written election of such TRA Party in its sole discretion (in an instrument signed by such TRA Party and delivered to PubCo) and to the extent specified therein by such TRA Party, this Agreement (i) shall cease to have further effect and shall not apply to an Exchange with respect to such TRA Party occurring after a date specified by such TRA Party, or (ii) may be amended in a manner reasonably determined by such TRA Party; provided, that such amendment shall not result in an increase in any payments owed by PubCo under this Agreement at any time as compared to the amounts and times of payments that would have been due in the absence of such amendment; provided, further, that such amendment shall not have any adverse effect on any other TRA Party.
Section 7.11. Independent Nature of Rights and Obligations. The rights and obligations of each TRA Party hereunder are several and not joint with the rights and obligations of any other Person. A TRA Party shall not be responsible in any way for the performance of the obligations of any other Person hereunder, nor shall a TRA Party have the right to enforce the rights or obligations of any other Person hereunder (other than PubCo). Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any TRA Party pursuant hereto or thereto, shall be deemed to constitute the TRA Parties acting as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the TRA Parties are in any way acting in concert or as a group with respect to such rights or obligations or the transactions contemplated hereby, and PubCo acknowledges that the TRA Parties are not acting in concert or as a group and will not assert any such claim with respect to such rights or obligations or the transactions contemplated hereby.
-23-
Section 7.12. Representative. By executing this Agreement, each of the TRA Parties shall be deemed to have irrevocably appointed the Representative as its agent and attorney in fact with full power of substitution to act from and after the date hereof and to do any and all things and execute any and all documents on behalf of such TRA Parties which may be necessary, convenient or appropriate to facilitate any matters under this Agreement, including: (i) execution of the documents and certificates required pursuant to this Agreement; (ii) except to the extent provided in this Agreement, receipt and forwarding of notices and communications pursuant to this Agreement; (iii) administration of the provisions of this Agreement; (iv) any and all consents, waivers, amendments or modifications deemed by the Representative to be necessary or appropriate under this Agreement and the execution or delivery of any documents that may be necessary or appropriate in connection therewith; (v) taking actions the Representative is authorized to take pursuant to the other provisions of this Agreement; (vi) negotiating and compromising, on behalf of such TRA Parties, any dispute that may arise under, and exercising or refraining from exercising any remedies available under, this Agreement and executing, on behalf of such TRA Parties, any settlement agreement, release or other document with respect to such dispute or remedy; and (vii) engaging attorneys, accountants, agents or consultants on behalf of such TRA Parties in connection with this Agreement and paying any fees related thereto on behalf of such TRA Parties, subject to reimbursement by such TRA Parties. The Representative may resign upon 30 days’ written notice to PubCo.
Section 7.13. Non-Recourse. Unless expressly agreed to otherwise by the parties in writing, this Agreement may only be enforced against, and any proceeding in connection with, arising out of or otherwise resulting from this Agreement, any instrument or other document delivered pursuant to this Agreement may only be brought against the Persons expressly named as parties and then only with respect to the specific obligations set forth herein with respect to such party. No past, present or future director, employee (including any officer), incorporator, manager, member, partner, stockholder, other equity holder or persons in a similar capacity, controlling person, Affiliate or other representative of any party or of any Affiliate of any party, or any of their respective successors, representatives and permitted assigns, shall have any liability or other obligation for any obligation of any party under this Agreement or for any proceeding in connection with, arising out of or otherwise resulting from this Agreement, any instrument or other document delivered pursuant to this Agreement; provided, however, that nothing in this Section 7.13 shall limit any liability or other obligation of the parties for breaches of the terms and conditions of this Agreement.
Section 7.14. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision, covenant or restriction of this Agreement is held by a court or other authority of competent jurisdiction to be invalid, void or unenforceable, or the application of such provision, covenant or restriction to any Person or any circumstance, is held by a court or other authority of competent jurisdiction to be invalid, void or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision, covenant or restriction to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application of such provision, in any other jurisdiction and the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.
-24-
Section 7.15. Interpretation and Construction.
(a) The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof.
(b) The Preamble, and all Recital, Article, Section, and Subsection references used in this Agreement are to the preamble, recitals, articles, sections and subsections to this Agreement unless otherwise specified herein or context otherwise requires.
(c) Except as otherwise expressly provided herein, for purposes of this Agreement: (i) the terms defined in the singular have a comparable meaning when used in the plural and vice versa; (ii) words importing the masculine gender shall include the feminine and neutral genders and vice versa; (iii) whenever the words “includes” or “including” are used, they shall be deemed to be followed by the words “without limitation”; (iv) the word “or” is not exclusive; (v) the words “hereto,” “hereof,” “hereby,” “herein,” “hereunder” and similar terms in this Agreement shall refer to this Agreement as a whole and not any particular provision of this Agreement; (vi) if a term is defined as one part of speech (such as a noun), it shall have a corresponding meaning when used as another part of speech (such as a verb); and (vii) the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends and such phrase shall not mean simply “if”.
(d) Except as otherwise expressly provided herein, the term “dollars” and the symbol “$” mean United States Dollars.
(e) When calculating the period of time within which, or following which, any act is to be done or step taken pursuant to this Agreement, the date that is the reference day in calculating such period shall be excluded and if the last day of the period is a non-Business Day, the period in question shall end on the next Business Day or if any action must be taken hereunder on or by a day that is not a Business Day, then such action may be validly taken on or by the next day that is a Business Day. References to a number of days shall refer to calendar days unless Business Days are specified.
(f) Unless otherwise specified herein or context otherwise requires, all references to (i) any contract, other agreement, document or instrument (excluding this Agreement) mean such contract, other agreement, document or instrument as amended or otherwise modified from time to time in accordance with the terms thereof and, unless otherwise specified therein, include all schedules, annexes, addendums, exhibits and any other documents attached thereto or incorporated therein by reference and (ii) this Agreement mean this Agreement (taking into account the provisions of Section 7.02) as amended or otherwise modified from time to time in accordance with Section 7.03.
(g) All references in this Agreement to any statute include the rules and regulations promulgated thereunder, in each case as amended, re-enacted, consolidated or replaced from time to time and in the case of any such amendment, re-enactment, consolidation or replacement as of the applicable date or during the applicable period of time, reference herein to a particular provision shall be read as referring to such amended, re-enacted, consolidated or replaced provision as of the applicable date or during the applicable period of time and shall also include, unless the context otherwise requires, all applicable guidelines, bulletins or policies made in connection therewith by a governmental entity.
-25-
(h) The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
[Remainder of Page Intentionally Left Blank]
-26-
IN WITNESS WHEREOF, Partnership, PubCo and each TRA Party have duly executed this Agreement as of the date first written above.
| CIM FINANCE HOLDINGS, LP | ||
| By: CIM Finance Holdings GP, LLC | ||
| Its: General Partner | ||
| By: CIM Real Estate Finance Trust, Inc. | ||
| Its: Sole Member | ||
| By: | /s/ Nathan DeBacker | |
| Name: | Nathan DeBacker | |
| Title: | Chief Financial Officer, Principal Accounting Officer and Treasurer | |
| CIM REAL ESTATE FINANCE TRUST, INC. | ||
| By: | /s/ Nathan DeBacker | |
| Name: | Nathan DeBacker | |
| Title: | Chief Financial Officer, Principal Accounting Officer and Treasurer | |
| TRA PARTIES: | ||
| CIM GROUP HOLDINGS, LLC | ||
| By: | /s/ David Thompson | |
| Name: | David Thompson | |
| Title: | Vice President and Chief Financial Officer | |
[Signature Page to Tax Receivable Agreement]
Exhibit 10.5
EXECUTION VERSION
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of June 24, 2026, by and among CIM Real Estate Finance Trust, Inc., a Maryland corporation (“CMFT”), and the Holders (as defined below). Certain capitalized terms used herein shall have the meanings ascribed to such terms in Section 1.
RECITALS:
WHEREAS, CIM Group Holdings, LLC, a Delaware limited liability company (“CIM Group Holdings” or the “CIM Contributor”), CMFT and CIM Finance Holdings, LP, a Delaware limited partnership (the “Operating Partnership”), have entered into a Contribution and Subscription Agreement, dated as of the date hereof (the “Contribution Agreement”), pursuant to which the CIM Contributor contributed, transferred and conveyed all of its right, title and interest in CIM Group Investments, LLC and CIM Group Management, LLC to the Operating Partnership and delivered other consideration in exchange for newly issued Class A-1 Limited Partnership Units and Class A-2 Limited Partnership Units in the Operating Partnership (“New OP Units”) and shares of voting preferred stock, par value $0.01 per share of CMFT (“CMFT Voting Preferred Shares”), subject to the terms and conditions set forth therein; and
WHEREAS, as an inducement to the CIM Contributor to enter into the Contribution Agreement and consummate the transactions contemplated thereby, CMFT has agreed to grant the registration rights set forth herein for the benefit of the Holders.
NOW, THEREFORE, in consideration of the foregoing and the covenants of the parties set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and subject to the terms and conditions set forth herein, the parties hereby agree as follows:
Section 1. Certain Definitions. In this Agreement, the following terms have the following respective meanings:
“AAA” has the meaning ascribed to it in Section 14(a)(ii).
“Action” means any action, cause of action, claim, demand, litigation, suit, investigation, review, grievance, citation, summons, subpoena, inquiry, audit, hearing, originating application to a tribunal, arbitration or other similar proceeding of any nature, whether civil, criminal, regulatory, administrative or otherwise, or whether in equity or at law, in contract, in tort or otherwise, in each case, by or before or otherwise involving a Governmental Entity or arbitration or similar tribunal (whether public or private).
“Agreement” has the meaning ascribed to it in the Preamble.
“Alternative Transactions” means agented transactions, block trades, sales directly into the market, purchases or sales by brokers, derivative transactions, short sales, stock loan or stock pledge transactions and sales not involving a Public Offering.
“Arbitration Demand Notice” has the meaning ascribed to it in Section 14(a)(ii)(A).
“Automatic Shelf Registration Statement” means an “automatic shelf registration statement” as defined in Rule 405 on Form S-3ASR.
“Board” means the board of directors of CMFT.
“Business Day” means any day other than (i) a Saturday or a Sunday or (ii) a day on which banks in New York, New York, USA are authorized or required by law to be closed.
“CIM Contributor” has the meaning ascribed to it in the Recitals.
“CIM Group Holdings” has the meaning ascribed to it in the Recitals.
“Class A Limited Partnership Units” has the meaning ascribed to it in the Limited Partnership Agreement.
“Class A-1 Limited Partnership Units” means the Class A Limited Partnership Units designated as “Class A-1 Limited Partnership Units” pursuant to the Limited Partnership Agreement.
“Class A-2 Limited Partnership Units” means the Class A Limited Partnership Units designated as “Class A-2 Limited Partnership Units” pursuant to the Limited Partnership Agreement.
“CMFT” has the meaning ascribed to it in the Preamble.
“CMFT Articles Supplementary” means the Articles Supplementary to the CMFT charter relating to the CMFT Voting Preferred Shares.
“CMFT Bylaws” means the Third Amended and Restated Bylaws of CMFT.
“CMFT Common Shares” means shares of common stock, par value $0.01 per share, in CMFT.
“CMFT Voting Preferred Shares” has the meaning ascribed to it in the Recitals.
“Commission” means the U.S. Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.
“Company Notice” has the meaning ascribed to it in Section 3(b).
“Contribution Agreement” has the meaning ascribed to it in the Recitals hereof.
“Demand Notice” has the meaning ascribed to it in Section 3(a).
“Demand Registration” has the meaning ascribed to it in Section 3(a).
“Demand Registration Statement” means any registration statements of CMFT filed under the Securities Act, covering the resale of any of the Registrable Securities pursuant to Section 3 of this Agreement and all amendments and supplements to any such registration statements, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all materials and documents incorporated by reference therein.
-2-
“Demand Requesting Holders” has the meaning ascribed to it in Section 3(b).
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Existing OP Limited Partnership Agreement” means the Second Amended and Restated Limited Partnership Agreement of CIM Real Estate Finance Operating Partnership, LP, dated as of June 24, 2026, by and among CRI REIT IV, LLC, a Delaware limited liability company, the Operating Partnership and the limited partners thereto, as may be hereafter amended from time to time.
“FINRA” means the Financial Industry Regulatory Authority.
“Governmental Entity” means any domestic or non-U.S. legislative, administrative or regulatory authority, agency, commission, body, court or other governmental or quasi-governmental entity of competent jurisdiction, including any supranational body.
“Holder” means each Person holding Registrable Securities, including (i) the CIM Contributor, (ii) each Person listed on Schedule I hereto, as may be amended from time to time to reflect transferees permitted by Section 13, and (iii) each Person holding Registrable Securities as a result of a transfer, distribution or assignment to that Person of Registrable Securities (other than pursuant to an effective Resale Registration Statement or Rule 144), which, for the avoidance of doubt, includes any “Permitted Transferees” as defined in the Limited Partnership Agreement; provided, that, if applicable, such transfer, distribution or assignment is made in accordance with Section 13 of this Agreement.
“Indemnified Party” has the meaning ascribed to it in Section 11(c).
“Indemnifying Party” has the meaning ascribed to it in Section 11(c).
“Law” or “Laws” means any law, statute, ordinance, common law, rule, regulation, Order or other legal requirement enacted, issued, promulgated, enforced or entered by a Governmental Entity of competent jurisdiction.
“Limited Partnership Agreement” means the Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated as of June 24, 2026, by and among CIM Finance Holdings GP, LLC, a Delaware limited liability company, CMFT, CIM Group Holdings and the other parties thereto, as may be hereafter amended from time to time.
“Listing Date” means the date on which CMFT Common Shares (or any successor class or series of CMFT securities) are first listed on a National Securities Exchange.
“Losses” has the meaning ascribed to it in Section 11(a).
-3-
“Majority Selling Holders” means Holder(s) who collectively own a majority of the Registrable Securities that are proposed to be included in a given Underwritten Offering of Registrable Securities.
“Maximum Number of Shares” has the meaning ascribed to it in Section 4(a).
“National Securities Exchange” means a national securities exchange registered under Section 6 of the Exchange Act.
“New OP Units” has the meaning ascribed to it in the Recitals hereof.
“Operating Partnership” has the meaning ascribed to it in the Recitals hereof.
“Order” means any administrative decision or award, decree, injunction, judgment, order, quasi-judicial decision or award, ruling or writ of any arbitrator, mediator or Governmental Entity.
“Permitted Transferee” means a Person to whom a Holder of Registrable Securities transfers such Registrable Securities in accordance with this Agreement, to the extent such Registrable Securities remain Registrable Securities following such transfer.
“Person” means an individual, partnership, corporation, business trust, limited liability company, limited liability partnership, joint stock company, trust, unincorporated association, joint venture or other entity.
“Piggyback Holders” has the meaning ascribed to it in Section 5(a).
“Piggyback Registration” has the meaning ascribed to it in Section 5(a).
“Piggyback Registration Statement” means any registration statements of CMFT filed under the Securities Act, covering the resale of any of the Registrable Securities pursuant to Section 5 of this Agreement, and all amendments and supplements to any such registration statements, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all materials and documents incorporated by reference therein.
“Piggyback Request” has the meaning ascribed to it in Section 5(a).
“Piggyback Shelf Registration Statement” has the meaning ascribed to it in Section 5(a).
“Prospectus” means the prospectus included in any Resale Registration Statement (including a prospectus that discloses information previously omitted from a prospectus filed as part of an effective Resale Registration Statement in reliance upon Rule 430A), as amended or supplemented by any prospectus supplement or any issuer free writing prospectus (as defined in Rule 433), with respect to the offering of any portion of the Registrable Securities covered by such Resale Registration Statement, and all other amendments and supplements to the prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus.
-4-
“Public Offering” means the offer for sale of securities pursuant to an effective registration statement filed under the Securities Act.
“Registrable Securities” means, with respect to any Holder, (i) any CMFT Common Shares issued or issuable upon the redemption and/or exchange of New OP Units pursuant to Section 9.4 of the Limited Partnership Agreement (including in connection with a “Permitted Merger” as such term is defined therein) and (ii) any additional securities issued or issuable as a dividend or other distribution on, in exchange for, or otherwise in respect of, such CMFT Common Shares (including as a result of combinations, recapitalizations, mergers, consolidations, reorganizations, stock splits or otherwise). For the avoidance of doubt, “Registrable Securities” shall be deemed to include any CMFT Common Shares issuable upon the redemption and/or exchange of New OP Units pursuant to Section 9.4 of the Limited Partnership Agreement (and securities issuable in respect of such CMFT Common Shares pursuant to clause (ii) of the foregoing), even if an exchange and/or redemption has not yet been elected or consummated in respect of such New OP Units. Notwithstanding the foregoing, CMFT Common Shares shall cease to be Registrable Securities with respect to any Holder at the time such shares (a) have been sold pursuant to an effective Resale Registration Statement or Rule 144 or (b) are eligible to be sold without restriction or limitation thereunder on volume or manner of sale under Rule 144.
“Registration Actions” has the meaning ascribed to it in Section 6.
“Registration Expenses” means any and all expenses incident to the performance of or compliance with the registration requirements of this Agreement, including (i) all fees of the Commission and the securities exchanges on which the Registrable Securities are listed from time to time and FINRA and all fees and expenses of any “qualified independent underwriter,” including the fees and expenses of any counsel thereto, (ii) all fees and expenses incurred in connection with compliance with federal or state securities or blue sky laws (including any registration, listing and filing fees and reasonable fees and disbursements of counsel in connection with blue sky qualification of any of the Registrable Securities and the preparation of a blue sky memorandum) and compliance with the rules of FINRA and the securities exchanges, (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, duplicating, printing, delivering and distributing any Resale Registration Statement, any Prospectus, any amendments or supplements thereto, securities sales agreements, certificates and any other documents relating to the performance under and compliance with this Agreement, (iv) security engraving and printing expenses (if any), (v) internal expenses of CMFT, the Operating Partnership and their respective subsidiaries (including, without limitation, all salaries and expenses of the officers and employees of CMFT, the Operating Partnership or their respective subsidiaries performing legal or accounting duties), (vi) all fees and expenses incurred in connection with the listing or inclusion of any of the Registrable Securities on a securities exchange pursuant to Section 8(o), as applicable, (vii) the fees and disbursements of counsel for CMFT, the Operating Partnership or their respective subsidiaries and of the independent public accountants of CMFT, the Operating Partnership or their respective subsidiaries (including the expenses of any special audit, agreed upon procedures and “cold comfort” letters required by or incident to such performance), (viii) the reasonable fees and disbursements of one counsel (along with any reasonably necessary local counsel) representing all Holders mutually agreed by the Majority Selling Holders, (ix) costs of printing and producing any agreements among underwriters, underwriting agreements, any “blue sky” or legal investment memoranda and any
-5-
selling agreements and other documents in connection with the offering, sale or delivery of the Registrable Securities, (x) transfer agents’ and registrars’ fees and expenses and the fees and expenses of any other agent or trustee appointed in connection with such offering, (xi) expenses relating to any analyst or investor presentations or any “road shows” undertaken in connection with the registration, marketing or selling of the Registrable Securities, (xii) fees and expenses payable in connection with any ratings of the Registrable Securities, including expenses relating to any presentations to rating agencies, (xiii) all out-of-pocket costs and expenses incurred by CMFT, the Operating Partnership, their respective subsidiaries or their appropriate officers in connection with their compliance with Section 8(v) and (xiv) any fees and disbursements of underwriters customarily paid in issuances and sales of securities (including the fees and expenses of any experts retained by CMFT in connection with any Resale Registration Statement); provided, however, that Registration Expenses shall exclude “broker” or “underwriter” fees, discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder.
“Remaining Registrable Securities” has the meaning ascribed to it in Section 2(c).
“Renewal Deadline” has the meaning ascribed to it in Section 2(d).
“Requesting Holders” means the Shelf Requesting Holders or the Demand Requesting Holders, as applicable.
“Requesting Party” has the meaning ascribed to it in Section 14(a)(ii)(A).
“Resale Registration Statement” means any registration statements of CMFT filed under the Securities Act, whether a Shelf Registration Statement, Demand Registration Statement, Piggyback Registration Statement, Piggyback Shelf Registration Statement or otherwise, covering the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, and all amendments and supplements to any such registration statements, including post-effective amendments and new registration statements, in each case including the Prospectus contained therein, all exhibits thereto and all materials and documents incorporated by reference therein.
“Rule 144,” “Rule 145,” “Rule 158,” “Rule 405,” “Rule 415,” “Rule 424,” “Rule 430A,” “Rule 430B” or “Rule 433,” respectively, means such specified rule promulgated by the Commission pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission as a replacement thereto having substantially the same effect as such rule.
“S-3 Shelf Eligible” means CMFT is eligible to use Form S-3 in connection with a secondary public offering of its equity securities on a delayed or continuous basis pursuant to Rule 415, in accordance with SEC Guidance.
“SEC Guidance” means (i) any publicly available written or oral interpretations, questions and answers, guidance and forms of the Commission, (ii) any oral or written comments, requirements or requests of the Commission or its staff, (iii) the Securities Act and the Exchange Act and (iv) any other rules, bulletins, releases, manuals and regulations of the Commission.
“Securities Act” means the Securities Act of 1933, as amended.
-6-
“Selling Expenses” means, if any, all underwriting or broker fees, discounts and selling commissions or similar fees or arrangements, transfer taxes allocable to the sale of the Registrable Securities included in the applicable offering and all other expenses incurred in connection with the performance by the Holders of their obligations under the terms of this Agreement.
“Shelf Public Offering” has the meaning ascribed to it in Section 2(b).
“Shelf Public Offering Notice” has the meaning ascribed to it in Section 2(b).
“Shelf Public Offering Request” has the meaning ascribed to it in Section 2(b).
“Shelf Registered Securities” means any Registrable Securities whose offer and sale is registered pursuant to a registration statement filed in connection with a Shelf Registration (including an Automatic Shelf Registration Statement).
“Shelf Registration” has the meaning ascribed to it in Section 2(a).
“Shelf Registration Conditions” has the meaning ascribed to it in Section 2(a).
“Shelf Registration Statement” means any registration statement of CMFT filed with the Commission on Form S-3 for an offering to be made on a delayed or continuous basis pursuant to Rule 415 (or any successor provision) covering the offer and sale of any of the Registrable Securities, as applicable pursuant to Section 2 of this Agreement and all amendments and supplements to any such registration statements, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all materials and documents incorporated by reference therein.
“Shelf Requesting Holders” has the meaning ascribed to it in Section 2(b).
“Suspension Notice” has the meaning ascribed to it in Section 6.
“Suspension Period” has the meaning ascribed to it in Section 6.
“Tax Receivable Agreement” means the Tax Receivable Agreement, dated as of June 24, 2026, by and among CIM Group Holdings, CMFT and the other parties thereto.
“Transaction Documents” means this Agreement, the Contribution Agreement, the Limited Partnership Agreement, the Tax Receivable Agreement, the Existing OP Limited Partnership Agreement, the CMFT Articles Supplementary and the CMFT Bylaws.
“Underwriters” means an underwriter or underwriters with respect to any Underwritten Offering.
“Underwritten Offering” means a Public Offering in which securities of CMFT are sold to Underwriters for reoffering to the public (including any underwritten “block trade”).
-7-
“Well-Known Seasoned Issuer” means a “well-known seasoned issuer” as defined in Rule 405 and which (a)(i) is a “well-known seasoned issuer” under paragraph (1)(i)(A) of such definition or (ii) is a “well-known seasoned issuer” under paragraph (1)(i)(B) of such definition and is also eligible to register a primary offering of its securities relying on General Instruction I.B.1 of Form S-3 under the Securities Act and (b) is not an “ineligible issuer” as defined in Rule 405.
Section 2. Shelf Registration Statements.
(a) Provided (i) CMFT is S-3 Shelf Eligible and (ii) a Shelf Registration on a Form S-3 registering Registrable Securities for resale is not then effective (subject to any applicable Suspension Period) (such conditions, the “Shelf Registration Conditions”), CMFT shall use reasonable best efforts to file and make effective prior to or on the Listing Date, a registration statement on Form S-3 for an offering on a delayed or continuous basis pursuant to Rule 415 (a “Shelf Registration”), with respect to all of the Registrable Securities. CMFT shall promptly give notice at least 10 Business Days prior to the anticipated filing date of such Shelf Registration to all Holders of Registrable Securities and offer such Holders the opportunity to register the number of Registrable Securities as each such Holder may request by written notice to CMFT, given within five Business Days after such Holders are given CMFT’s notice of the Shelf Registration. The “Plan of Distribution” section of a Shelf Registration Statement shall permit, in addition to firm commitment Underwritten Offerings, any other lawful means of disposition of Registrable Securities, including Alternative Transactions. With respect to each Shelf Registration, CMFT shall use reasonable best efforts to cause such Shelf Registration Statement to remain effective until the date set forth in Section 4(c). No Holder shall be entitled to include any of its Registrable Securities in a Shelf Registration unless such Holder has complied with Section 9. If permitted under the Securities Act, such Shelf Registration Statement shall be an Automatic Shelf Registration Statement. The rights of Holders with respect to any Shelf Registration shall be subject to Suspension Periods, as provided in Section 6.
(b) A Holder of Shelf Registered Securities may sell its Registrable Securities pursuant to the Shelf Registration Statement from time to time in accordance with the plan of distribution set forth in the Shelf Registration Statement. A Holder or Holders of Shelf Registered Securities may also request (the “Shelf Public Offering Request”) that a shelf take-down be in the form of an Underwritten Offering (a “Shelf Public Offering”) if the gross proceeds reasonably anticipated to be generated from the sale of the Shelf Registered Securities equals or exceeds $50 million. Promptly upon receipt of a Shelf Public Offering Request, CMFT shall provide notice (the “Shelf Public Offering Notice”) of such proposed Underwritten Offering to the other Holders holding Shelf Registered Securities. Such other Holders may, by written request to CMFT within five Business Days after receipt of such Shelf Public Offering Notice (the “Shelf Requesting Holders”), offer and sell up to all of their Shelf Registered Securities of the same class or series as the Shelf Registered Securities proposed to be sold in such Underwritten Offering. No Holder shall be entitled to include any of its Registrable Securities in a Shelf Public Offering unless such Holder has complied with Section 9. The Underwriter or Underwriters selected for such Underwritten Offering shall be selected in accordance with Section 4(b).
(c) After a Shelf Registration is declared effective, upon written request by one or more Holders (which written request shall specify the amount of such Holders’ Registrable Securities to be registered), CMFT shall, in accordance with SEC Guidance, (i) as promptly as practicable after receiving a request from a Holder that is a Permitted Transferee of a former Holder of Registrable
-8-
Securities, file a Prospectus supplement to include such Permitted Transferee as a selling stockholder in such registration statement, (ii) if it is a Well-Known Seasoned Issuer and such registration statement is an unallocated Automatic Shelf Registration Statement to which additional selling stockholders may be added by means of a Prospectus supplement under Rule 430B, as promptly as practicable after receiving such request, file a Prospectus supplement to include such Holders as selling stockholders in such registration statement, or (iii) otherwise, as promptly as practicable after the date the Registrable Securities requested to be registered pursuant to this Section 2(c) that have not already been so registered represent more than 1.5% of the outstanding Registrable Securities, file a post-effective amendment to the registration statement or a new Shelf Registration Statement, as applicable, to include such Holders in such Shelf Registration and use reasonable best efforts to have such post-effective amendment or new Shelf Registration Statement declared effective. To the extent that any registration statement with respect to a Shelf Registration is expected to no longer be usable for the resale of Registrable Securities registered thereon (“Remaining Registrable Securities”) pursuant to SEC Guidance, CMFT shall, no later than 90 days prior to the date such registration statement is expected to no longer be usable, use reasonable best efforts to prepare and file a new registration statement with respect to such Shelf Registration, as if the Holders of such Remaining Registrable Securities had requested a Shelf Registration with respect thereto pursuant to Section 2(a) and perform all actions required under this Agreement with respect to such Shelf Registration.
(d) If, by the third anniversary (the “Renewal Deadline”) of the initial effective date of a Shelf Registration Statement filed pursuant to Section 2(a) any of the Registrable Securities remain unsold by the Holders included on such Shelf Registration Statement, CMFT shall file, if it has not already done so and is eligible to do so, a new Shelf Registration Statement covering the Registrable Securities included on the prior Shelf Registration Statement and shall use reasonable best efforts to cause such Shelf Registration Statement to be declared effective on or prior to the Renewal Deadline. CMFT shall consult with and provide a copy of the proposed new Shelf Registration Statement to the Holders at least 10 Business Days prior to the contemplated filing of such Shelf Registration Statement with the Commission, and shall consider in good faith any modifications or changes the Holders may request within such time period prior to filing such new Shelf Registration Statement. CMFT shall take all other actions necessary or appropriate to permit the public offering and sale of the Registrable Securities to continue as contemplated in the prior Shelf Registration Statement (subject to any modifications agreed upon between CMFT and the Holders pursuant to this Section 2(d)).
Section 3. Demand Registration Rights.
(a) Subject to the provisions hereof, if CMFT is not, or is not reasonably anticipated to be, in compliance with its obligations under Section 2 to file and maintain the effectiveness of a Shelf Registration Statement on or at any time after the Listing Date, or if otherwise either of the Shelf Registration Conditions is not, or is not reasonably anticipated to be, satisfied on or at any time after the Listing Date, each Holder may request registration for resale under the Securities Act of all or part of the Registrable Securities owned by such Holder (a “Demand Registration”) (with such registration to be effective as promptly as practicable following the date of such request or the Listing Date (whichever occurs later)) by giving written notice thereof (a “Demand Notice”) to CMFT (which Demand Notice shall specify the number of Registrable Securities to be offered by such Holder and the intended methods of distribution). Subject to Section 4(a) below, CMFT
-9-
shall use reasonable best efforts (i) to file a Demand Registration Statement registering for resale such number of Registrable Securities as requested to be so registered within 45 days in the case of a registration on Form S-3 (and 60 days in the case of a registration on Form S-11 or such other appropriate form) after CMFT’s receipt of a Demand Notice, and (ii) to cause such Demand Registration Statement to be declared effective by the Commission as soon as reasonably practicable thereafter; provided that CMFT shall not be required to file more than two (2) Demand Registration Statements in any 12-month period.
(b) Promptly (but in any event within three Business Days) after receipt of any Demand Notice under Section 3(a), CMFT shall give written notice of such requested registration (which shall specify the intended method of disposition of such Registrable Securities) to all other Holders of Registrable Securities (a “Company Notice”), and CMFT shall include (subject to the provisions of this Agreement) in such registration, all Registrable Securities of such Holders with respect to which CMFT has received written requests for inclusion therein within five Business Days after the delivery of such Company Notice (the “Demand Requesting Holders”); provided, that any such other Holder may withdraw its request for inclusion prior to the applicable registration statement becoming effective by notifying CMFT in accordance with Section 14(e). CMFT shall not include in a Demand Registration Statement CMFT Common Shares for sale for its own account or for the account of other security holders of CMFT without the prior written consent of the Demand Requesting Holders, and inclusion of such CMFT Common Shares shall remain subject to Section 4(a) in all respects.
Section 4. Priority; Underwriters.
(a) In the event of a Shelf Public Offering in respect of a Shelf Registration Statement or if a Demand Registration Statement is filed in connection with an Underwritten Offering and the managing Underwriters advise CMFT and the Holders in respect of such Shelf Public Offering or Demand Registration Statement that, in the reasonable opinion of the managing Underwriters, the number of securities proposed to be sold pursuant to a Shelf Public Offering in respect of a Shelf Registration Statement or a Demand Registration Statement exceeds the number of securities that can be sold in such Underwritten Offering without materially delaying or jeopardizing the success of such offering (including the offering price per security) (such maximum number of securities, the “Maximum Number of Shares”), CMFT shall include in such Shelf Public Offering in respect of a Shelf Registration Statement or Underwritten Offering in respect of a Demand Registration Statement only that number of securities that, in the reasonable opinion of the managing Underwriters, can be sold without materially delaying or jeopardizing the success of the offering (including the offering price per security), which securities shall be so included in the following order of priority, unless otherwise agreed by CMFT and the Holders covered by such Shelf Public Offering in respect of a Shelf Registration Statement or Underwritten Offering in respect of a Demand Registration Statement: (i) first, the Registrable Securities of the Requesting Holders pro rata in accordance with the number of Registrable Securities owned thereby, (ii) second, any securities CMFT proposes to sell for its own account, and (iii) third, any other securities that have been requested to be so included in such Shelf Public Offering in respect of a Shelf Registration Statement or Demand Registration Statement.
-10-
(b) If any of the Registrable Securities covered by a Shelf Public Offering in respect of a Shelf Registration Statement or Demand Registration Statement are to be sold in an Underwritten Offering, the Holders of a majority of the Registrable Securities to be included in such Shelf Public Offering in respect of a Shelf Registration Statement or on such Demand Registration Statement, as applicable, shall have the right to select the Underwriters (and their roles) in the offering and determine the structure of the offering and negotiate the terms of any underwriting agreement as they relate to the Requesting Holders, including the number of Registrable Securities to be sold (if not all Registrable Securities offered can be sold at the highest price offered by the Underwriters), the offering price and underwriting discount.
(c) Following the date of effectiveness of any Shelf Registration Statement or Demand Registration Statement, CMFT shall use reasonable best efforts to keep the Shelf Registration Statement or Demand Registration Statement, as applicable, continuously effective (including requirements that CMFT would need to meet to be S-3 Shelf Eligible), (i) for a period of not less than 180 days (or, if sooner, until all Registrable Securities have been sold under such Resale Registration Statement), which duration shall not count any Suspension Period, or, (ii) in the case of a Shelf Registration, until the earlier of the date (1) on which all of the securities covered by such Shelf Registration are no longer Registrable Securities and (2) on which CMFT cannot extend the effectiveness of such Shelf Registration because it is no longer S-3 Shelf Eligible.
Section 5. Piggyback Registration Rights.
(a) If at any time CMFT has determined to register any of its securities for its own account or for the account of other security holders of CMFT on any registration statement (other than on Form S-3 relating to any dividend reinvestment or similar plan or Forms S-4 or S-8) that permits the inclusion of the Registrable Securities (a “Piggyback Registration”), CMFT shall give the Holders written notice thereof promptly (but in no event less than 10 Business Days prior to the anticipated filing date) and, subject to Section 5(b), shall include in such Piggyback Registration Statement all Registrable Securities requested to be included therein pursuant to the written request (a “Piggyback Request”) of one or more Holders (the “Piggyback Holders”) received within 10 Business Days after delivery of CMFT’s notice. If a Piggyback Registration is effected pursuant to a registration statement on Form S-3 or the then appropriate form for an offering to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act or any successor rule thereto (a “Piggyback Shelf Registration Statement”), the Holders of Registrable Securities shall be notified by CMFT of and shall have the right, but not the obligation, to participate in any offering pursuant to such Piggyback Shelf Registration Statement, subject to the same limitations that are applicable to any other Piggyback Registration as set forth above.
(b) If a Piggyback Registration Statement or a Piggyback Shelf Registration Statement is filed in connection with a primary Underwritten Offering on behalf of CMFT, and the managing Underwriters advise CMFT that, in the reasonable opinion of the managing Underwriters, the number of CMFT Common Shares proposed to be included in such Piggyback Registration Statement or Piggyback Shelf Registration Statement exceeds the Maximum Number of Shares, CMFT shall include in such Piggyback Registration Statement or Piggyback Shelf Registration Statement, unless otherwise agreed by CMFT and the Majority Selling Holders, (i) first, the number of CMFT Common Shares that CMFT proposes to sell, and (ii) second, the Registrable Securities of Piggyback Holders (such number of shares shall be allocated among such Piggyback Holders on a pro rata basis according to the number of Registrable Securities requested to be included by each such Piggyback Holder).
-11-
(c) If a Piggyback Registration Statement is filed in connection with an Underwritten Offering on behalf of a holder of CMFT Common Shares other than under this Agreement, and the managing Underwriters advise CMFT that, in the reasonable opinion of the managing Underwriters, the number of CMFT Common Shares proposed to be sold pursuant to such Piggyback Registration Statement exceeds the Maximum Number of Shares, then CMFT shall include in such Piggyback Registration Statement, unless otherwise agreed by CMFT and such holder(s) (including, if applicable, a majority of the Piggyback Holders), (i) first, the Registrable Securities of Piggyback Holders (such number of shares shall be allocated among such Piggyback Holders on a pro rata basis according to the number of Registrable Securities requested to be included by each such Piggyback Holder, if necessary), (ii) second, the number of CMFT Common Shares requested to be included therein by any other holders and (iii) third, the number of CMFT Common Shares that CMFT proposes to sell.
(d) If any Piggyback Registration Statement is filed in connection with a primary or secondary Underwritten Offering, CMFT shall have the right to select the managing Underwriter or Underwriters to administer any such offering at its sole expense.
(e) CMFT shall not grant to any Person the right to request CMFT to register any CMFT Common Shares on a Piggyback Registration Statement unless such rights are consistent with the provisions of this Section 5.
(f) If at any time after receiving a Piggyback Request and prior to the effective date of the registration statement filed in connection with such registration CMFT shall reasonably determine for any reason not to register the securities originally intended to be included in such registration statement, CMFT may, at its election, give written notice of such determination to the Piggyback Holders and thereupon CMFT shall be relieved of its obligation to register such Registrable Securities in connection with the registration of securities originally intended to be included in such registration statement.
Section 6. Suspension.
Subject to the limitations set forth in this Section 6, CMFT shall be entitled to suspend its obligation to (a) file or submit (but not to prepare) any Resale Registration Statement pursuant to Section 2 or Section 3, (b) file or submit any amendment to such a Resale Registration Statement, (c) file, submit or furnish any supplement or amendment to a Prospectus included in such a Resale Registration Statement, (d) make any other filing with the Commission, (e) cause such a Resale Registration Statement or other filing with the Commission to become or remain effective or (f) take any similar actions or actions related thereto (including entering into agreements and actions related to the marketing of securities) (collectively, “Registration Actions”) (A) upon (i) the issuance by the Commission of a stop order suspending the effectiveness of any such Resale Registration Statement or the initiation of proceedings with respect to such a Resale Registration Statement under Section 8(d) or 8(e) of the Securities Act, (ii) the Board’s determination, in its good faith judgment, that any such Registration Action should not be taken because it would reasonably be expected to materially interfere with or require the public disclosure of any material corporate development or plan, including any material financing, securities offering, acquisition, disposition, corporate reorganization or merger or other transaction involving CMFT or any of its subsidiaries, (iii) CMFT possessing material non-public information regarding CMFT the
-12-
disclosure of which (x) the Board determines, in its good faith judgment, would reasonably be expected to not be in the best interests of CMFT, (y) would, in the good faith determination of the Board, require any revision to the Resale Registration Statement so that it shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary or make the statements therein, in light of the circumstances under which they are made, not misleading and (z) CMFT is not otherwise required to disclose or (B) to the extent necessary to ensure compliance with CMFT’s insider trading policy. Upon the occurrence of any of the conditions described in clauses (i)-(iii) above in connection with undertaking a Registration Action, CMFT shall give prompt (and in no event less than five (5) days’) notice of such suspension (and whether such action is being taken pursuant to clause (i), (ii) or (iii) above) (a “Suspension Notice”) to the Holders. Upon the termination of such condition, CMFT shall give prompt notice thereof to the Holders and shall promptly proceed with all Registration Actions that were suspended pursuant to this Section 6. CMFT may only suspend Registration Actions pursuant to clause (ii) or (iii) above on two occasions during any period of 12 consecutive months for a reasonable time specified in the Suspension Notice but not exceeding an aggregate of 90 days (which period may not be extended or renewed) during such 12 consecutive month period (each such occasion, a “Suspension Period”). Each Suspension Period shall be deemed to begin on the date the relevant Suspension Notice is given to the Holders and shall be deemed to end on the earlier to occur of (1) the date on which CMFT gives the Holders a notice that the Suspension Period has terminated and (2) the date on which the number of days during which a Suspension Period has been in effect exceeds the 90-day limit during such 12 consecutive month period. If the filing of any Resale Registration Statement is suspended pursuant to this Section 6, once the Suspension Period ends the Holders requesting such registration may request a new Resale Registration Statement (and any such request shall not be counted as an additional Demand Notice for purposes of Section 3). Notwithstanding anything to the contrary in this Agreement, CMFT shall not be in breach of, or have failed to comply with, any obligation under this Agreement where CMFT acts or omits to take any action as required to comply with applicable law or any SEC Guidance. Each Holder shall keep confidential the fact that a Suspension Period is in effect unless otherwise notified by CMFT, except (a) for disclosure to the Holders of Registrable Securities covered by the applicable Resale Registration Statement and their employees, agents and professional advisers who reasonably need to know such information for purposes of assisting such Holders of securities covered by the applicable Resale Registration Statement with respect to its investment in the CMFT Common Shares or New OP Units and agree to keep it confidential, (b) for disclosures to the extent required in order to comply with reporting obligations to such Holder’s limited partners, stockholders, members, or other direct or indirect investors who are subject to confidentiality arrangements with such Holder, (c) if and to the extent such matters are publicly disclosed by CMFT or any of its subsidiaries or any other Person that, to the actual knowledge of such Holder, was not subject to an obligation or duty of confidentiality to CMFT or its subsidiaries, (d) as required by applicable law (provided, that the Holder gives prior written notice to CMFT of such requirement and the contents of the proposed disclosure to the extent it is permitted to do so under applicable law), and (e) for disclosure to any other Holder who is subject to the foregoing confidentiality requirement.
-13-
Section 7. Holdback Agreements.
(a) Each Holder of Registrable Securities that holds or beneficially owns at least 5% of the outstanding CMFT Common Shares agrees that in connection with any registered Underwritten Offering of CMFT Common Shares, and upon request from the managing Underwriter(s) for such offering, such Holder shall not, without the prior written consent of such managing Underwriter(s), during such period as is reasonably requested by the managing Underwriter(s) (which period shall in no event be longer than three (3) days prior to and one hundred eighty (180) days after the pricing of such offering), transfer any Registrable Securities. The foregoing provisions of this Section 7(a) shall not apply to offers or sales of Registrable Securities that are included in an offering pursuant to Section 2, Section 3 or Section 5 and shall be applicable to the Holders of Registrable Securities only if, for so long as and to the extent that CMFT, the directors and executive officers of CMFT, each selling stockholder included in such offering and each other Person holding or beneficially owning at least 5% of the outstanding CMFT Common Shares are subject to the same restrictions. Each Holder of Registrable Securities agrees to execute and deliver such other agreements as may be reasonably requested by the managing Underwriter(s) that are consistent with the foregoing provisions of this Section 7(a) and are necessary to give further effect thereto.
(b) To the extent requested by the managing Underwriter(s) for the applicable offering, CMFT shall not effect any sale registered under the Securities Act or other public distribution of equity securities during the period commencing three (3) days prior to and ending one hundred eighty (180) days after the pricing of an Underwritten Offering pursuant to Section 2, Section 3 or Section 5, other than a registration (i) pursuant to a registration statement on Form S-8 (or other registration solely relating to an offering or sale to employees or directors of CMFT pursuant to any employee stock plan or other employee benefit arrangement), (ii) pursuant to a registration statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 or any successor rule thereto) or (iii) in connection with any dividend or distribution reinvestment or similar plan.
Section 8. Registration Procedures.
If and whenever CMFT is required to effect the registration of any Registrable Securities pursuant to this Agreement, CMFT shall use reasonable best efforts to effect and facilitate the registration, offering and sale of such Registrable Securities in accordance with the intended method of disposition thereof as promptly as is reasonably practicable and, pursuant thereto, CMFT shall as promptly as reasonably practicable and as applicable:
(a) prepare and file with the Commission, as specified in this Agreement, each Resale Registration Statement, which shall comply as to form in all material respects with the requirements of the applicable form and include all exhibits and financial statements required by the Commission to be filed therewith, make all required filings in connection therewith and (if the Resale Registration Statement is not automatically effective upon filing) use its reasonable best efforts to cause such Resale Registration Statement to become effective as promptly as practicable in accordance with Section 4(c); provided that before filing a Resale Registration Statement or any amendments or supplements thereto, CMFT shall furnish to one counsel selected by the Holders holding a majority of the then issued and outstanding Registrable Securities for such registration copies of all documents proposed to be filed, which documents shall be subject to review by such counsel to the Holders at CMFT’s expense, and give the Holders participating in such registration an opportunity to comment on such documents and keep such Holders reasonably informed as to the registration process; provided, further, that CMFT shall not file any such amendments or supplements without the prior written consent of Holders holding a majority of the then issued and outstanding Registrable Securities;
-14-
(b) subject to Section 6, (i) prepare and file with the Commission such amendments and post-effective amendments to each such Resale Registration Statement as may be necessary to keep such Resale Registration Statement effective for the period described in Section 4(c), (ii) cause each Prospectus contained therein to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 or any similar rule that may be adopted under the Securities Act, and (iii) comply in all material respects with the provisions of the Securities Act with respect to the disposition of all securities covered by each Resale Registration Statement during the applicable period in accordance with the intended method or methods of distribution specified by the Holders of Registrable Securities covered by such Resale Registration Statement;
(c) to the extent any “free writing prospectus” (as defined in Rule 405 under the Securities Act) is used, file with the Commission any free writing prospectus that is required to be filed by CMFT with the Commission in accordance with the Securities Act and retain any free writing prospectus not required to be filed;
(d) furnish to the Holders of Registrable Securities covered by a Resale Registration Statement, without charge, such number of copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other documents as any such Holder may reasonably request in writing, in order to facilitate the public sale or other disposition of the Registrable Securities; subject to Section 6, CMFT hereby consents to the use of such Prospectus, including each preliminary Prospectus, by such Holders in connection with the offering and sale of the Registrable Securities covered by any such Prospectus;
(e) use reasonable best efforts to register or qualify, or obtain exemption from registration or qualification for, all Registrable Securities by the time the applicable Resale Registration Statement is declared effective by the Commission under all applicable state securities or “blue sky” laws of such domestic jurisdictions as any managing Underwriter or Holder of Registrable Securities covered by a Resale Registration Statement may reasonably request in writing, keep each such registration or qualification or exemption effective during the period such Resale Registration Statement is required to be kept effective pursuant to Section 4(c) and do any and all other acts and things that may be reasonably necessary or advisable to enable such Holder to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Holder;
(f) use its reasonable best efforts to cause all Registrable Securities covered by any registration statement to be registered with or approved by such other Governmental Entities or self-regulatory bodies (including, for the avoidance of doubt, FINRA) as may be necessary or reasonably advisable in light of the business and operations of CMFT to enable each Holder participating in the registration to consummate the disposition of such Registrable Securities in accordance with the intended method or methods of disposition thereof;
-15-
(g) promptly notify each Holder participating in the registration and the managing underwriters of any underwritten offering:
(i) each time when the registration statement, any pre-effective amendment thereto, the Prospectus or any Prospectus supplement or any post-effective amendment to the registration statement has been filed and, with respect to the registration statement or any post-effective amendment thereto, when the same has become effective;
(ii) of any oral or written comments by the Commission or of any request by the Commission for amendments or supplements to the registration statement or the Prospectus or for any additional information regarding such Holder;
(iii) of the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or the initiation or threatening of any proceedings for any such purpose; and
(iv) of the receipt by CMFT of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction;
(h) notify each Holder participating in such registration, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of any event that would cause the Prospectus included in such registration statement to contain an untrue statement of a material fact or to omit any fact necessary to make the statements made therein not misleading in light of the circumstances under which they were made, and, as promptly as practicable, prepare, file with the Commission and furnish to such Holder a reasonable number of copies of a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus will not contain any untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in light of the circumstances under which they were made;
(i) during the period of time set forth in Section 4(c), use reasonable best efforts to avoid the issuance of, or if issued, to obtain the withdrawal of, any order enjoining or suspending the use or effectiveness of a Resale Registration Statement or suspending the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as promptly as practicable;
(j) not file or make any amendment to any registration statement with respect to any Registrable Securities, or any amendment of or supplement to the Prospectus used in connection therewith, that refers to any Holder covered thereby by name or otherwise identifies such Holder as the holder of any securities of CMFT without the consent of such Holder (such consent not to be unreasonably withheld or delayed), unless and to the extent such disclosure is required by law;
(k) upon request, furnish to each requesting Holder with Registrable Securities covered by a Resale Registration Statement, without charge, at least one conformed copy of such Resale Registration Statement and any post-effective amendment or supplement thereto (without documents incorporated therein by reference or exhibits thereto, unless requested);
-16-
(l) make available for inspection by any Holder participating in the registration, any underwriter participating in any underwritten offering pursuant to such Resale Registration Statement and any attorney, accountant or other agent retained by any such Holder or underwriter, all corporate documents, financial and other records relating to CMFT and its business reasonably requested by such Holder or underwriter, cause CMFT’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such Holder, underwriter, attorney, accountant or agent in connection with such registration or offering and make senior management of CMFT and CMFT’s independent accountants available for customary due diligence and drafting sessions; provided, that any Person gaining access to information or personnel of CMFT pursuant to this Section 8(l) shall (i) reasonably cooperate with CMFT to limit any resulting disruption to CMFT’s business and (ii) protect the confidentiality of any information regarding CMFT which CMFT determines in good faith to be confidential and of which determination such Person is notified, unless such information (A) is or becomes known to the public without a breach of this Agreement, (B) is or becomes available to such Person on a non-confidential basis from a source other than CMFT, (C) is independently developed by such Person, (D) is requested or required by a deposition, interrogatory, request for information or documents by a Governmental Entity, subpoena or similar process or (E) is otherwise required to be disclosed by law;
(m) except as provided in Section 6, upon the occurrence of any event contemplated by Section 8(h), use reasonable best efforts to promptly prepare a supplement or post-effective amendment to a Resale Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, such Prospectus shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and, upon request, promptly furnish to each requesting Holder a reasonable number of copies of each such supplement or post-effective amendment;
(n) enter into customary agreements and take all other action in connection therewith in order to expedite or facilitate the distribution of the Registrable Securities included in such Resale Registration Statement;
(o) cause (including seeking to cure in CMFT’s listing or inclusion application any deficiencies cited by the exchange or market) the listing or inclusion of all Registrable Securities on any securities exchange on which such Registrable Securities may then be listed on or included in, and enter into such customary agreements including a supplemental listing application and indemnification agreement in customary form;
(p) prepare and file in a timely manner all documents and reports required by the Exchange Act and, to the extent CMFT’s obligation to file such reports pursuant to Section 15(d) of the Exchange Act expires prior to the expiration of the effectiveness period of the Resale Registration Statement as required by Section 4(c) hereof, register the Registrable Securities under the Exchange Act and maintain such registration through the effectiveness period required by Section 4(c);
(q) (i) otherwise use reasonable best efforts to comply in all material respects with all applicable rules and regulations of the Commission, (ii) make generally available to its stockholders, as soon as reasonably practicable, earnings statements (which need not be audited) covering at least 12 months that satisfy the provisions of Section 11(a) of the Securities Act and
-17-
Rule 158 thereunder, and (iii) delay filing any Resale Registration Statement or Prospectus or amendment or supplement to such Resale Registration Statement or Prospectus to which any Holder of Registrable Securities covered by any Resale Registration Statement shall have reasonably objected on the grounds that such Resale Registration Statement or Prospectus or amendment or supplement does not comply in all material respects with the requirements of the Securities Act; provided, however, that CMFT may file such Resale Registration Statement or Prospectus or amendment or supplement following such time as CMFT shall have made a good faith effort to resolve any such issue with the objecting Holder and shall have advised the Holder in writing of its reasonable belief that such filing complies in all material respects with the requirements of the Securities Act;
(r) cause to be maintained a registrar and transfer agent for all Registrable Securities covered by any Resale Registration Statement from and after a date not later than the effective date of such Resale Registration Statement;
(s) in connection with any sale or transfer of the Registrable Securities (whether or not pursuant to a Resale Registration Statement) that would result in the securities being delivered no longer constituting Registrable Securities, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing (or book entries evidencing) the Registrable Securities to be sold, which certificates or book entries shall not bear any transfer restrictive legends arising under federal or state securities laws, and to enable such Registrable Securities to be in such denominations and registered in such names as the Holders may request at least three Business Days prior to any sale of the Registrable Securities;
(t) cause management of CMFT to cooperate as may be reasonably requested with each of the Holders of Registrable Securities covered by a Resale Registration Statement, including by participating in roadshows, one-on-one meetings with institutional investors, and any request for information or other diligence request by any such Holder or any Underwriter; notwithstanding the foregoing, management of CMFT shall not be required to participate in roadshows or one-on-one meetings with institutional investors unless requested by one or more Holders of Registrable Securities having an aggregate value of at least $50 million;
(u) in connection with a public offering of Registrable Securities, whether or not such offering is an Underwritten Offering, use commercially reasonable efforts to obtain a customary “comfort” letter from the independent registered accountants for CMFT and any acquisition target of CMFT whose financial statements are required to be included or incorporated by reference in any Resale Registration Statement, in form and substance customarily given by independent registered public accountants in an Underwritten Offering addressed to the Underwriters, if any, and to the Holders of the Registrable Securities being sold pursuant to each Resale Registration Statement;
(v) in the case of an underwritten offering of Registrable Securities, make senior management of CMFT available, to the extent requested by the managing underwriter(s), to assist in the marketing of the Registrable Securities to be sold in such underwritten offering, including the participation of such members of senior management of CMFT in “road show” presentations and other customary marketing activities, including “one-on-one” meetings with prospective purchasers of the Registrable Securities to be sold in such underwritten offering, and otherwise facilitate, cooperate with, and participate in such underwritten offering and customary selling efforts related thereto, in each case to the same extent as if CMFT were engaged in a primary underwritten registered offering of its common stock;
-18-
(w) in the case of an underwritten offering of Registrable Securities, enter into such customary agreements (including underwriting and lock-up agreements in customary form) and take all such other customary actions as any Holder participating in such offering or the managing underwriter(s) of such offering reasonably requests in order to expedite or facilitate the disposition of such Registrable Securities;
(x) execute and deliver all instruments and documents (including an underwriting agreement or placement agent agreement, as applicable in customary form) and take such other actions and obtain such certificates and opinions as sellers of the Registrable Securities being sold reasonably request in order to effect a public offering of such Registrable Securities and in such connection, whether or not an underwriting agreement is entered into and whether or not the offering is an Underwritten Offering, (A) make such representations and warranties to the Holders of such Registrable Securities and the Underwriters, if any, with respect to the business of CMFT and its subsidiaries, and the Resale Registration Statement and documents, if any, incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to Underwriters in Underwritten Offerings, and, if true, confirm the same if and when requested, and (B) use reasonable best efforts to furnish to the selling Holders and Underwriters of such Registrable Securities opinions and negative assurance letters of counsel to CMFT and updates thereof (which counsel and opinions (in form, scope and substance) are reasonably satisfactory to the managing Underwriters, if any, and one counsel selected by a majority of the selling Holders of the Registrable Securities), covering the matters customarily covered in opinions requested in Underwritten Offerings and such other matters as may be reasonably requested by such counsel and any such Underwriters;
(y) furnish to each Holder and each underwriter, if any, participating in an offering of Registrable Securities (i) (A) all legal opinions of outside counsel to CMFT required to be included in the registration statement and (B) a written legal opinion of outside counsel to CMFT, dated the closing date of the offering, in form and substance as is customarily given in opinions of outside counsel to CMFT to underwriters in underwritten registered offerings; and (ii) (A) obtain all consents of independent public accountants required to be included in the registration statement and (B) on the date of the applicable Prospectus, on the effective date of any post-effective amendment to the registration statement and at the closing of the offering, dated the respective dates of delivery thereof, a “comfort letter” signed by CMFT’s independent public accountants in form and substance as is customarily given in accountants’ letters to underwriters in underwritten registered offerings;
(z) upon reasonable request by a Holder, file an amendment to any applicable Resale Registration Statement (or Prospectus supplement, as applicable), to name additional Holders of Registrable Securities or otherwise update the information provided by any such Holder in connection with such Holder’s disposition of Registrable Securities;
-19-
(aa) not later than the effective date of such registration statement, provide a CUSIP number for all Registrable Securities covered thereby and provide the applicable transfer agent with printed certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company; provided, that CMFT may satisfy its obligations hereunder without issuing physical stock certificates through the use of The Depository Trust Company’s Direct Registration System; and
(bb) otherwise use its reasonable best efforts to take or cause to be taken all other actions necessary or reasonably advisable to effect the registration, marketing and sale of such Registrable Securities contemplated by this Agreement.
Section 9. Obligations of the Holders.
(a) CMFT may require the Holders to furnish in writing to CMFT such information regarding such Holder and the proposed method or methods of distribution of Registrable Securities by such Holder as CMFT may from time to time reasonably request in writing or as may be required to effect the registration of the Registrable Securities, and no Holder shall be entitled to be named as a selling stockholder in any Resale Registration Statement or use the Prospectus forming a part thereof if such Holder does not provide such information to CMFT.
(b) Each Holder agrees to, upon receipt of any notice from CMFT of the happening of any event of the kind described in Section 8(g)(ii), Section 8(g)(iii) or Section 8(h) hereof, immediately discontinue disposition of Registrable Securities pursuant to a Resale Registration Statement until (i) any such stop order is vacated, or (ii) if an event described in Section 8(g)(iii) or Section 8(h) occurs, such Holder’s receipt of the copies of the supplemented or amended Prospectus. If so directed by CMFT, such Holder shall deliver to CMFT (at the reasonable expense of CMFT) all copies, other than permanent file copies and the Prospectus covering such Registrable Securities that are then current at the time of receipt of such notice that are then in such Holder’s possession.
Section 10. Expenses of Registration. CMFT shall pay all Registration Expenses in connection with the registration and resale of the Registrable Securities pursuant to this Agreement and any other actions that may be taken in connection with the registration contemplated herein. Each Holder participating in a registration pursuant to Section 3 or Section 5 shall bear such Holder’s proportionate share (based on the total number of Registrable Securities sold in such registration) of all Selling Expenses relating to the sale or disposition of such Holder’s Registrable Securities pursuant to any Resale Registration Statement.
Section 11. Indemnification and Contribution.
(a) CMFT shall indemnify and hold harmless each Holder of Registrable Securities covered by a Resale Registration Statement, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), and the officers, directors, members, managers, stockholders, partners, limited partners, agents and employees of each of them, to the fullest extent permitted by applicable law, from and against any and all losses, claims, actions, damages, liabilities, costs (including reasonable attorneys’ fees) and expenses, joint or several (collectively, “Losses”), as incurred, arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained in a Resale Registration Statement or any Prospectus or in any amendment or supplement thereto or in any preliminary Prospectus,
-20-
or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, or (ii) any violation or alleged violation by CMFT of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement; in each case, except to the extent, but only to the extent, that (A) such untrue statement or omission is based upon information regarding such Holder furnished in writing to CMFT by or on behalf of such Holder expressly for use therein, or (B) such information relates to such Holder or such Holder’s proposed method of distribution of the Registrable Securities and was approved in writing by or on behalf of such Holder expressly for use in the Resale Registration Statement, such Prospectus or in any amendment or supplement thereto.
(b) Each Holder of Registrable Securities covered by a Resale Registration Statement shall, severally and not jointly, indemnify and hold harmless CMFT, each director of CMFT, each officer of CMFT who shall sign a Resale Registration Statement, and each Person who controls any of the foregoing Persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) against any Losses, as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in a Resale Registration Statement or any Prospectus or in any amendment or supplement thereto or in any preliminary Prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, but only to the extent that such untrue statement or omission is based upon information regarding such Holder furnished in writing to CMFT by or on behalf of such Holder expressly for use therein. In no event shall any such indemnification liability of such Holder of Registrable Securities be greater in amount than the dollar amount of the proceeds received by such Holder of Registrable Securities upon the sale of the Registrable Securities giving rise to such indemnification obligation.
(c) Each party entitled to indemnification under this Section 11 (the “Indemnified Party”) shall give written notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, but the omission to so notify the Indemnifying Party shall not relieve it from any liability which it may have to the Indemnified Party pursuant to the provisions of this Section 11 except to the extent of the actual damages suffered by such delay in notification. The Indemnifying Party shall assume the defense of such action, including the employment of counsel to be chosen by the Indemnifying Party to be reasonably satisfactory to the Indemnified Party, and payment of expenses. The Indemnified Party shall have the right to employ its own counsel in any such case, but the legal fees and expenses of such counsel shall be at the expense of the Indemnified Party, unless (i) the employment of such counsel was authorized in writing by the Indemnifying Party in connection with the defense of such action, (ii) the Indemnifying Party has failed to assume the defense of such claim or action within a reasonable time after receipt of notice of such claim or action or (iii) the Indemnified Party shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to the Indemnifying Party (in which case the Indemnifying Party shall not have the right to direct the defense of such action on behalf of the Indemnified Party), in any of which events such fees and expenses shall be borne by the Indemnifying Party. No
-21-
Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to the entry of any judgment or enter into any settlement unless such judgment or settlement (x) includes an unconditional release by the claimant or plaintiff to such Indemnified Party from all liability in respect to such claim or litigation, and (y) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any Indemnified Party.
(d) If the indemnification provided for in this Section 11 is unavailable to a party that would have been an Indemnified Party under this Section 11 in respect of any Losses referred to herein, then each party that would have been an Indemnifying Party hereunder shall, in lieu of indemnifying such Indemnified Party, contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and such Indemnified Party, on the other hand, in connection with the statement or omission which resulted in such Losses, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or such Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. CMFT and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 11 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 11(d).
(e) No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
Section 12. Rule 144. CMFT shall, at CMFT’s expense, for so long as any Holder holds any Registrable Securities, use reasonable best efforts to cooperate with the Holders, as may be reasonably requested by any Holder from time to time, to facilitate any proposed sale of Registrable Securities by the requesting Holder(s) in accordance with the provisions of Rule 144, including by using reasonable best efforts (i) to comply with the current public information requirements of Rule 144; (ii) to file with the Commission in a timely manner all reports and other documents required of CMFT under the Securities Act and the Exchange Act; (iii) furnish to any Holder of Registrable Securities, promptly upon written request, a written statement by CMFT as to its compliance with the reporting requirements of Rule 144 and of the Securities Act and Exchange Act; and (iv) to provide opinions of counsel as may be reasonably necessary in order for such Holder to avail itself of such rule to allow such Holder to sell such Registrable Securities without registration under the Securities Act.
Section 13. Transfer of Registration Rights. The rights and obligations of a Holder under this Agreement may be transferred or otherwise assigned to a transferee or assignee of Registrable Securities, provided, (i) such transferee or assignee becomes a party to this Agreement or agrees in writing to be subject to the terms hereof to the same extent as if such transferee or assignee were an original party hereunder, and (ii) CMFT is given written notice by such Holder of such transfer or assignment stating the name and address of such transferee or assignee and identifying the securities with regard to which such rights and obligations are being transferred or assigned.
-22-
Section 14. Miscellaneous.
(a) Governing Law; Arbitration.
(i) This Agreement, and all Actions (whether in contract, tort or statute) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be governed by, and enforced in accordance with, the Laws of the State of Delaware, including its statutes of limitations, without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction (whether of the State of Delaware or any other jurisdiction) would be required thereby.
(ii) Notwithstanding anything to the contrary contained in this Agreement, all claims, disputes and controversies between CMFT and any of the Holders arising out of or in connection with this Agreement shall be resolved by binding arbitration in Los Angeles, California by the American Arbitration Association (the “AAA”), in accordance with this Section 14. Any arbitration called for by this Section 14 shall be conducted in accordance with the following procedures:
A. CMFT or any of the Holders (the “Requesting Party”) may demand arbitration pursuant to this Section 14 at any time by giving written notice of such demand (the “Arbitration Demand Notice”) to all of the Holders (in the case where CMFT is the Requesting Party) or CMFT and the other Holders (in the case where any of the Holders is a Requesting Party), which Arbitration Demand Notice shall describe in reasonable detail the nature of the claim, dispute or controversy.
B. Within fifteen (15) days after the giving of an Arbitration Demand Notice or such additional time as required by the AAA, the AAA shall select and designate in writing three (3) reputable and disinterested individuals willing to act as arbitrators of the claim, dispute or controversy in question.
C. The presentations of CMFT and the Holders in the arbitration proceeding shall be commenced and completed within sixty (60) days after the selection of the arbitration panel pursuant to clause (B) above, and the arbitration panel shall render its decision (and specify in reasonable detail its reasons therefor) in writing within thirty (30) days after the completion of such presentations. Any decision concurred in by any two (2) of the arbitrators shall constitute the decision of the arbitration panel, and unanimity shall not be required.
D. The arbitration panel shall include in its decision a direction that all of the attorneys’ fees and costs of any party or parties and the costs of such arbitration be paid by the losing party or parties in the arbitration. On the application of a party before or after the initial decision of the arbitration panel, and proof of its attorneys’ fees and costs, the arbitration panel shall order the other party to make any payments directed pursuant to the preceding sentence.
-23-
(iii) Any decision rendered by the arbitration panel in accordance herewith shall be final and binding on the applicable parties, and judgment thereon may be entered by any state or federal court of competent jurisdiction. Except as otherwise provided for in this Agreement or in any other Transaction Document, arbitration shall be the exclusive method available for resolution of claims, disputes and controversies arising between and among the parties relating to this Agreement and the conduct of CMFT and the Holders in relation to this Agreement, and CMFT and the Holders stipulate that the provisions of this Agreement shall be a complete defense to any suit, action or proceeding in any court or before any administrative or arbitration tribunal with respect to any such claim, controversy or dispute.
(b) Entire Agreement. This Agreement (including any exhibits or schedules hereto), together with the Contribution Agreement and the other Transaction Documents, constitutes the full and entire understanding and agreement and supersedes all other prior agreements and understandings, both written and oral, among the parties hereto with regard to the subject matter hereof.
(c) Interpretation and Usage. In this Agreement, unless there is a clear contrary intention: (i) when a reference is made to a section, an annex or a schedule, that reference is to a section, an annex or a schedule of or to this Agreement; (ii) the singular includes the plural and vice versa; (iii) reference to any agreement, document or instrument means that agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof; (iv) reference to any statute, rule, regulation or other law means that statute, rule, regulation or law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder, and reference to any section or other provision of any law means that section or provision from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of that section or provision; (v) “hereunder,” “hereof,” “hereto,” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular article, section or other provision of this Agreement; (vi) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term; (vii) references to agreements, documents or instruments shall be deemed to refer as well to all addenda, exhibits, schedules or amendments thereto; and (viii) the terms “writing,” “written” and words of similar import shall be deemed to include communications and documents in e-mail, fax or any other similar electronic or documentary form.
(d) Amendment. No amendment, supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by CMFT and the Holders of at least a majority of the Registrable Securities (it being understood that a modification of Schedule I hereto to reflect a transfer permitted by Section 13 shall not be deemed to require such approval). No provision of this Agreement may be waived except by an instrument in writing executed by the party against whom the waiver is to be effective.
-24-
(e) Notices. Each notice, demand, request, request for approval, consent, approval, disapproval, designation or other communication (each of the foregoing being referred to herein as a notice) required or desired to be given or made under this Agreement shall be in writing (except as otherwise provided in this Agreement), and shall be effective and deemed to have been received (i) when delivered in person, (ii) when sent by electronic transmission (provided that no failure message is generated) to the recipient’s e-mail address, (iii) five (5) days after having been mailed by certified or registered United States mail, postage prepaid, return receipt requested, or (iv) the next Business Day after having been sent by a nationally recognized overnight mail or courier service, receipt requested. Notices shall be addressed as follows: (A) if to a Holder, at such Holder’s address or e-mail address set forth on Schedule I hereto, or at such other address or e-mail address as such Holder shall have furnished to CMFT in writing, (B) if to any assignee or transferee of a Holder, at such address or e-mail address as such assignee or transferee shall have furnished to CMFT in writing, or (C) if to CMFT, at the address of its principal executive offices and addressed to the attention of the President, or at such other address or e-mail address as CMFT shall have furnished to the Holders. Any notice or other communication required to be given hereunder to a Holder in connection with a registration may instead be given to a designated representative of such Holder.
(f) Counterparts. This Agreement may be executed in any number of separate counterparts (including by means of facsimile or portable document format (.pdf)), each of which shall be enforceable against the parties actually executing such counterparts and each of which is an original but all of which taken together shall constitute one and the same instrument.
(g) Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision, covenant or restriction of this Agreement is held by a court or other authority of competent jurisdiction to be invalid, void or unenforceable, or the application of such provision, covenant or restriction to any Person or any circumstance, is held by a court or other authority of competent jurisdiction to be invalid, void or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision, covenant or restriction to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application of such provision, in any other jurisdiction and the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.
(h) Section Titles. Section titles are for descriptive purposes only and shall not control or alter the meaning of this Agreement as set forth in the text.
(i) Successors and Assigns. This Agreement shall be binding upon the parties hereto and their respective successors and permitted assigns and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Subject to Section 13, if any successor or permitted assignee of any Holder shall acquire Registrable Securities in any manner, whether by operation of law or otherwise, (a) such successor or permitted assignee shall be entitled to all of the benefits of a “Holder” under this Agreement and (b) such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities such Person shall be conclusively deemed to have agreed to be bound by all of the terms and provisions hereof.
-25-
(j) Changes in Securities Laws. In the event that any amendment, repeal or other change in the securities laws shall render the provisions of this Agreement inapplicable, CMFT shall provide the Holders with substantially similar rights to those granted under this Agreement and use its reasonable best efforts to cause such rights to be as comparable as possible to the rights granted to the Holders hereunder.
(k) Termination; Survival. This Agreement shall terminate with respect to any Holder upon such time as such Holder ceases to hold or beneficially own any Registrable Securities, provided that the provisions of Section 10, Section 11 and this Section 14 shall survive such termination.
[Signature Page Follows]
-26-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
| CIM REAL ESTATE FINANCE TRUST, INC. | ||
| By: | /s/ Nathan DeBacker | |
| Name: | Nathan DeBacker | |
| Title: | Chief Financial Officer, Principal Accounting Officer and Treasurer | |
[Signature Page to Registration Rights Agreement]
| HOLDERS: | ||
| CIM GROUP HOLDINGS, LLC | ||
| By: | /s/ David Thompson | |
| Name: | David Thompson | |
| Title: | Vice President and Chief Financial Officer | |
[Signature Page to Registration Rights Agreement]
Schedule I
Holders of Registrable Securities Address, E-mail Address
CIM Group Holdings, LLC
c/o CIM Group
4700 Wilshire Boulevard
Los Angeles, CA 90010
Attn: Avraham Shemesh
Email: [email protected]
Schedule I
Exhibit 99.1
CIM Real Estate Finance Trust (CMFT) Acquires CIM Group, LLC’s Business to Operate as a Diversified Owner,
Operator, Lender, Developer and Real Assets Management Platform
LOS ANGELES — JUNE 29, 2026 — CIM Real Estate Finance Trust, Inc. (“CMFT”) today announced that it has acquired CIM Group, LLC’s real assets management business and portfolio of investments to form a combined company. In exchange for its contributed businesses, CIM Group, LLC received 67.5% voting and economic ownership of the combined company, with the remaining 32.5% owned by existing CMFT shareholders. CMFT has changed its legal name to CIM Group, Inc. (“CIM” or the “Combined Company”).
The Combined Company will operate as a diversified owner, operator, lender, developer and real assets management platform, managing over $30 billion of assets, and pursuing opportunities across five proven platforms — Real Estate, Credit, Infrastructure, Opportunity Zones, and Strategic Opportunities, with a focus on generating attractive risk-adjusted returns. Richard Ressler will continue to serve as Chief Executive Officer and Chairman of the Combined Company. The Combined Company will not be treated as a REIT for U.S. tax purposes.
“For over 30 years at CIM Group, LLC, we have focused on building a diversified real assets platform capable of creating value across market cycles,” said Richard Ressler, Chief Executive Officer of CIM. “This transaction represents the next evolution of that strategy. With CMFT and CIM Group, LLC’s platforms together, we are creating a real assets manager with greater scale, stronger alignment, enhanced resources, and a commitment to long-term value creation, while preserving continuity across our leadership team, investment professionals, and operations. We are excited about the opportunity to deploy additional capital into CIM Group, Inc.’s proven strategies alongside our high-quality clients and partners to generate attractive risk-adjusted returns, as well as capture the enhanced organic and inorganic growth opportunities ahead of us.”
Following an extensive evaluation by a Special Committee of CMFT’s Board of Directors, composed exclusively of independent directors, the transaction was unanimously approved by both the Special Committee and the full Board. The transaction provides for: funding for quarterly dividends over the next three years; a majority-independent Board with existing CMFT Independent Directors expected to continue in their role; and continued regulatory reporting obligations, including annual, quarterly and periodic filings, providing ongoing transparency. The Combined Company has committed to commence a process within 24 months to pursue a future listing of the Combined Company’s common stock on a national stock exchange and to seek to complete such listing or an alternative liquidity event within five years.
Advisors
Goldman Sachs & Co. LLC served as financial advisor and Venable LLP served as legal advisor to the Special Committee of CMFT’s Board of Directors. Taft Stettinius & Hollister LLP served as legal advisor to CMFT. Sullivan & Cromwell LLP served as legal advisor to CIM Group, LLC.
About CIM Group, LLC
Prior to the acquisition of its business by CMFT, which became CIM Group, Inc., CIM Group, LLC was the owner of a community-focused real estate and infrastructure owner, operator, lender and developer. Beginning in 1994, CIM Group, LLC created value in projects and positively impacted the lives of people in communities across the globe by delivering more than $60 billion of essential real estate and infrastructure projects. Its diverse team of experts continues to deliver on this mission, applying broad knowledge and a disciplined approach through hands-on management of real assets from due diligence to operations through disposition, as part of CIM Group, Inc.
About CIM Real Estate Finance Trust (CMFT)
Prior to the acquisition of CIM Group, LLC, CMFT was an externally-managed, publicly registered non-listed REIT with a diversified portfolio of senior secured mortgage loans, creditworthy long-term net-leased property investments and other senior loan and liquid credit investments. Affiliates of CIM Group, LLC managed CMFT’s investments.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this communication, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to: (i) the anticipated benefits of the proposed transaction to CMFT and CMFT’s shareholders, (ii) the anticipated impact of the proposed transaction on the combined company’s business, future financial and operating results, liquidity profile and access to capital, (iii) other aspects of both companies’ operations and operating results, and (iv) our goals, plans and projections with respect to our operations, financial position and business strategy. We caution that forward-looking statements are not guarantees. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Factors that could cause or contribute to such material differences include: (i) the failure of the transaction to deliver the estimated value and benefits expected by CMFT, including the failure of the combined company to generate sufficient cash to finance contemplated dividend amounts to shareholders and to successfully pursue a listing of CMFT’s common stock on a national stock exchange, (ii) the incurrence of unexpected future costs, liabilities or obligations as a result of the transaction, (iii) the effect of the announcement of the transaction on the ability of the combined company to retain and hire necessary personnel and maintain relationships with clients and other material business counterparties, (iv) the failure of CMFT to successfully transform into a diversified asset manager and to implement its plans, forecasts and other expectations with respect to CIM Group, LLC’s real assets management business and investment portfolio over time, (v) the failure of the combined company to declare and pay expected dividend amounts over the next three years and (vi) other risks and uncertainties inherent in a transaction of this size and nature. The payment of dividends in the future, if any, will be at the discretion of CMFT’s board of directors and will depend upon such factors as earnings levels, capital requirements, contractual restrictions, our overall financial condition, available distributable reserves and any other factors deemed relevant by CMFT’s board of directors.
In addition to the statements referred to above, you can identify these forward-looking statements by the use of words such as “may,” “will,” “seek,” “expects,” “anticipates,” “believes,” “targets,” “intends,” “should,” “estimates,” “could,” “continue,” “assume,” “projects,” “plans” or similar expressions. Such forward-looking statements are subject to various risks and uncertainties, including those described above and those under the section entitled “Risk Factors” in CMFT’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, filed with the SEC. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this communication and in CMFT’s other filings with the SEC. CMFT undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
No Offer or Solicitation
This communication does not constitute an offer to sell or the solicitation of an offer to buy or sell any securities or a solicitation of a proxy or of any vote or approval. No public offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
Contacts
Kelly Kimberly/Stephen Pettibone/Akash Lodh
FGS Global
+1 212-687-8080
Exhibit 99.2 CIM Real Estate Finance Trust, Inc. (CMFT) Acquires CIM Group, LLC’s Real Assets Management Business Creates a Diversified Owner, Operator, Lender, Developer and Real Assets Management Platform June 2026 CIMgroup.com ©2026 CIM Group
Disclaimer Forward-Looking Statements and maintain relationships with clients and other material that are included in this communication and in CMFT’s other Certain statements contained in this communication, other business counterparties, (iv) the failure of CMFT to filings with the SEC. CMFT undertakes no obligation to than historical facts, may be considered forward-looking successfully transform into a diversified asset manager and publicly update or revise any forward-looking statement, statements within the meaning of Section 27A of the to implement its plans, forecasts and other expectations with whether as a result of new information, future events, or Securities Act of 1933, as amended, and Section 21E of the respect to CIM Group, LLC’s real assets management otherwise. Securities Exchange Act of 1934, as amended. These business and investment portfolio over time, (v) the failure of No Offer or Solicitation statements include, but are not limited to: (i) the anticipated the combined company to declare and pay expected This communication does not constitute an offer to sell or benefits of the proposed transaction to CMFT and CMFT’s dividend amounts over the next three years and (vi) other the solicitation of an offer to buy or sell any securities or a shareholders, (ii) the anticipated impact of the proposed risks and uncertainties inherent in a transaction of this size solicitation of a proxy or of any vote or approval. No public transaction on the combined company’s business, future and nature. offering of securities shall be made except by means of a financial and operating results, liquidity profile and access to The payment of dividends in the future, if any, will be at prospectus meeting the requirements of Section 10 of the capital, (iii) the other aspects of both companies’ operations the discretion of CMFT’s board of directors and will depend U.S. Securities Act of 1933, as amended. and operating results, and (iv) our goals, plans and upon such factors as earnings levels, capital requirements, Assets Owned and Operated (AOO) represents the aggregate projections with respect to our operations, financial position contractual restrictions, our overall financial condition, assets owned and operated by CMFT on behalf of partners and business strategy. We caution that forward-looking available distributable reserves and any other factors (including where CMFT contributes alongside for its own account) statements are not guarantees. Accordingly, there are or will deemed relevant by CMFT’s board of directors. and co-investors, whether or not CMFT has discretion, in each case be important factors that could cause actual outcomes or without duplication. In addition to the statements referred to above, you can results to differ materially from those indicated in these identify these forward-looking statements by the use of statements. Factors that could cause or contribute to such words such as “may,” “will,” “seek,” “expects,” “anticipates,” material differences include: (i) the failure of the transaction “believes,” “targets,” “intends,” “should,” “estimates,” “could,” to deliver the estimated value and benefits expected by “continue,” “assume,” “projects,” “plans” or similar CMFT, including the failure of the combined company to expressions. Such forward-looking statements are subject to generate sufficient cash to finance contemplated dividend various risks and uncertainties, including those described amounts to shareholders and to successfully pursue a listing above and those under the section entitled “Risk Factors” in of CMFT’s common stock on a national stock exchange, (ii) CMFT’s most recent Annual Report on Form 10-K and the incurrence of unexpected future costs, liabilities or Quarterly Report on Form 10-Q, filed with the SEC. These obligations as a result of the transaction, (iii) the effect of the factors should not be construed as exhaustive and should be announcement of the transaction on the ability of the read in conjunction with the other cautionary statements combined company to retain and hire necessary personnel CIMgroup.com ©2026 CIM Group 1
CMFT + CIM: A Transformational Combination Creating Value for CMFT Shareholders Growth Diversification Path to Increased Aligned Interests of Business Liquidity Financial Strength and Continuity of Leadership CIMgroup.com ©2026 CIM Group 2
Transaction Summary – Acquisition by CMFT of CIM Group, LLC’s (“CIM”) real assets management platform to form a combined company – CIM contributed businesses in exchange for equity in new operating partnership – Majority-independent Board including; CMFT's three existing with CMFT independent directors – Will operate as a diversified owner, operator, lender, developer, and real assets – Richard Ressler continuing as Chief Executive Officer and Transaction manager under the name CIM Group, Inc. (“CIM Group” or “combined company”) Chairman of the combined company Governance Overview – 100% rollover of CIM Group, LLC’s real assets management business into the – Internalized management structure (no external manager); combined company with no cash at closing shareholder and management interests aligned within a single – Ownership: 67.5% CIM owners / 32.5% CMFT shareholders enterprise – Earnout: Potential increase in CIM ownership of 3.75% based on achievement of specified performance metrics through December 31, 2028 – Transaction includes committed funding to enable CMFT to pay its shareholders 1– Diversified base of Assets Owned and Operated valued at quarterly dividends for three years following closing 2,3 over $30 billion – Funding provides for anticipated quarterly dividends of at least $0.06/share for Financial Dividend – Combined company expected to benefit from an investment- first four quarters, $0.07/share for next four quarters, and $0.095/share for next Strength grade corporate credit rating for its real assets management four quarters business – Dividends expected to be eligible for preferential U.S. federal income tax rates – The board of directors of the combined company intends to continue to approve and establish an estimated value of its common stock on at least an annual basis Reporting Per Share – SEC reporting obligations maintained, including annual, quarterly for the purposes of its DRIP and share redemption program. Until its next update, and periodic filings Information Requirements this amount will continue to be $5.14, as previously approved and established by the Board as of December 31, 2025 – The combined company is a multi-strategy owner, operator, lender, developer Operating Timing– Combination completed on June 24, 2026 and real assets management platform with over $30 billion of assets owned and Strategy 2,3 operated across five platforms. The company will no longer be a REIT 1) Committed funding from operating partnership subsidiary 67.5% owned by CIM; Future dividends will be at the discretion of CMFT’s board of directors. 2) As of 3/31/2026 3) Assets Owned and Operated (AOO) represents the aggregate assets owned and operated by CIM on behalf of partners (including where CIM contributes alongside for its own account) and co-investors, whether or not CIM has discretion, in each case without duplication. CIMgroup.com ©2026 CIM Group 3
Transforming CMFT into a Diversified Real Assets Manager CMFT Standalone Combined Company Higher return potential across five platforms: Real estate: mortgage and income-producing Strategy Real Estate, Credit, Infrastructure, Opportunity Zones, properties Strategic Opportunities Diversified Assets Owned and Operated and revenue Portfolio Concentration Sector concentration: real estate and mortgages streams Limited as a REIT—growth constrained by REIT Ability to deploy capital across five platforms and in Growth Opportunities structure and permitted activities organic growth and strategic M&A Complex pathway to shareholder liquidity as non- Enhanced path to liquidity with commitment to seek Shareholder Liquidity listed commercial real estate mortgage REIT exchange listing or other liquidity event Management Alignment Externally managed Highly-aligned internal management Three-year commitment to fund quarterly dividends, 1 Dividends Ordinary dividend paid monthly providing income continuity. Dividends expected to be eligible for preferential U.S. federal income tax rates 1) Committed funding from operating partnership subsidiary 67.5% owned by CIM. In order to facilitate a smooth transition, CMFT expects to continue paying declared dividends monthly in the near term. Future dividends will be at the discretion of CMFT’s board of directors. CIMgroup.com ©2026 CIM Group 4
Diversified Real Assets Managers Command Premium Valuation Multiples 1 Real Assets Management: Key Business Model Advantages Illustrative Implied P/E Multiples ~16x Lower interest rate sensitivity as economics shifts from On average, mREITs 1 rate-driven spreads to capital-light fee income trade at ~0.78x price 2 to book value Recurring fee-related revenue offers higher earnings stability 2 ~9x Diversified earnings across five strategies replace mortgage 3 credit concentration risk Higher growth potential through reinvestment of 4 earnings into organic growth and strategic M&A Q1’26 LQA 2026E Internalized management aligns shareholder and manager 5 interests within one company CRE mREIT Peer Set Asset Manager Peer Set Source: Company filings, Bloomberg, FactSet; market data as of June 9, 2026 1) Based on after-tax P/E multiples for asset manager peers and earnings multiples for CRE mREIT peers, with the latter calculated as the inverse of the median last-quarter annualized dividend yield of ~11% for the peer set. CRE mREIT peers include STWD, BXMT, ARI, LADR, BRSP, TRTX, KREF, and ACRE. Asset manager peers include BX, BAM, ARES, EQT, CG, TPG, OWL, CVC, and ANTIN. 2.Calculated as Price per Share / Reported Book Value per Share. CIMgroup.com ©2026 CIM Group 5
CIM Group, Inc. is Positioned to Create Long-Term Value Scale, capital resources and strategic flexibility to pursue growth opportunities Organic Growth Capital Deployment Acquisitions − Ability to deploy capital across Real Estate, − Reinvest retained earnings into higher-return − Acquire complementary platforms and Credit, Infrastructure, Opportunity Zones and opportunities strategies Strategic Opportunities, and in organic growth − Seed new investment vehicles and strategies − Enter new markets and broaden distribution and strategic M&A across existing platforms capabilities − Leverage CIM's vertically integrated operating − Dynamically allocate capital across asset − Increase scale and operating leverage across platform and established client relationships classes and market cycles the platform − Continue raising capital from Institutional, − Leverage investment-grade corporate credit − Create additional pathways for long-term Private Wealth and public investors rating for its real assets management business shareholder value creation − Benefit from recurring management fee and investment income streams Commitment to pursue a potential future listing of the CIM Group, Inc.’s stock on a national stock exchange or seek an alternative liquidity event. CIMgroup.com ©2026 CIM Group 6
Five Platforms CIM Group Overview (Pre-Combination) Real Estate CIM is a Diversified Owner, Operator, Lender, Developer, and Real Assets Management Platform with a 30-year track record. With broad in-house expertise, we seek to create value Credit 1 for our clients and communities through robust real asset equity and credit platforms. Infrastructure 30+ Years 296 Assets 900+ $31.8B 2 Real Asset Experience Across the Americas & Western Europe Employees Assets Owned & Operated Atlanta New York 9 Opportunity Zones Corporate Offices Worldwide Chicago Orlando Dallas Phoenix Headquartered in Los Angeles London Tokyo 3 • Affiliated Offices Strategic Opportunities Data as of 3/31/26. 1) Clients span partners, co-investors, shareholders, advisory clients, funds, accounts, borrowers, tenants, and others served across CIM’s real estate, infrastructure, and credit businesses. 2) AOO is the total assets CIM owns and operates for partners and co-investors, regardless of discretion and without duplication. 3) Affiliated offices run on smaller, dedicated resources; those in Mexico and South America operate through a joint partnership. CIMgroup.com ©2026 CIM Group 7
CIM Group, Inc. CIMgroup.com ©2026 CIM Group